"The BCC is not surprised by the news that the Chancellor of the Exchequer has cut his GDP growth forecast. In our August Quarterly Economic Forecast we predicted 2005 growth of 2%. Even in May, when the economy appeared stronger, the BCC'c 2005 forecast was 2.4%, well below the official Budget growth forecast of 3-3.5%. The Chancellor's new reported growth forecast of still appears a little too high in our view.
"While high oil prices and low European growth are clearly important factors accounting for lower UK growth in 2005, it is important to bear in mind the dampening domestic factors: a sharp deceleration in consumer spending growth, a rapidly weakening housing market, and worrying signs of falling business confidence.
"Against this worrying background, we need pro-active policies on a number of fronts. The MPC must be ready to cut interest rates if economic circumstances worsen. The Chancellor on his part must try to revive business confidence by making it clear that there will be no new taxes on business under any circumstances, and by pushing more aggressively the deregulation agenda."