The British Chambers of Commerce has warned hiking interest rates too early poses a “huge risk” to the UK economy.
The organisation has downgraded its growth forecasts from 3.2 per cent to 3 per cent for this year, from 2.8 per cent to 2.6 per cent next year and from 2. 5 per cent to 2.4 per cent in 2016.
It says the downgrades are a “warning sign” that there are still economic hurdles to overcome, such as the risk of deflation in the eurozone, slowing growth in emerging markets and political unrest in the Ukraine and the Middle East.
The BBC expects the first increase in interest rates to occur in Q3 2015 to 0.75 per cent.
BCC director general John Longworth says: “Uncertainty in the economy generally affects consumer confidence as does the spending and debt cycle.
“Our dependence on consumer spending and mortgages means the UK economy is particularly sensitive to interest rates. Any short-term rate rises could present a huge risk to our economy.
“A sustainable, well-balanced economy can only be achieved if there is commitment from all political parties to long-term strategic planning, rather than the political short-termism that has plagued British growth prospects for too long.”