British Chambers of Commerce Economic Forecast – January 2009 update The British Chambers of Commerce (BCC) is today publishing its January 2009 Economic Forecast update, the first of the year. The forecast predicts:
Cumulative GDP falls totalling 2.9 per cent over the five quarters between Q3 2008 and Q3 2009; this compares with cumulative GDP declines of 2.25 per cent predicted in the November forecast
A bigger decline in UK GDP in the current recession than in the early 1990s recession: 2.9 per cent in 2008-09, 2.5 per cent in 1992-93
In annual average terms, the January update predicts negative GDP growth of 2.2 per cent in 2009, worse than the 1.6 per cent negative growth indicated in our November forecast
There is a distinct rise of deflation in the second half of 2009
RPI is very likely to register deflation during significant periods of 2009
Over the next two years, UK unemployment will rise to a peak of 3.1 million, some 10 per cent of the workforce
Total UK government borrowing set to increase to £130 billion, 8.9 per cent of GDP 2009/10
The UK budgetary position will remain extremely serious in the next few years
The need to reduce government borrowing after the recession will dampen UK growth prospects for a considerable period
Chief Economist at the BCC, David Kern, added: “UK prospects have worsened significantly since our last forecast at the end of 2008. “We now predict bigger GDP declines, higher unemployment and larger government borrowing than envisaged in November. “The BCC update signals a bigger cumulative decline in UK GDP during the current recession than in the 1990s. “Over the next two years, UK unemployment will increase to 3.1 million and total government borrowing will hit £130 billion.”
BCC Director-General, David Frost, said:
“I've worked through three recessions now and 2009 looks like it will be one of the toughest years I've ever seen for UK plc.
“Some of the strain can be avoided, but only if the Government can address the two key problems of confidence and cash-flow. We must avoid losing viable, companies during this downturn.
“It will be business that drives the UK out of this economic downturn.”