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UK employers raise growth view on strength in services, spending
[LONDON] The British Chambers of Commerce raised their forecast for the country's economic growth in 2015 and over the following two years because of strength in the country's huge services sector and booming consumer spending.
The BCC upgraded its growth forecast for this year to 2.6 per cent - bringing it in line with the average forecast in a Reuters poll of economists published on Wednesday - compared with a previous forecast of 2.3 percent made in June.
For 2016 and 2017, growth was likely to reach 2.7 per cent, up from the previous forecast of 2.6 per cent - a slightly faster growth rate than forecast by most other economists, including those at the Bank of England.
BCC Director-General John Longworth said services would grow nearly four times more quickly than manufacturing this year, and Britain's export performance would again fall short.
To make the recovery longer-lasting, the Bank of England should keep interest rates low for as long as possible and the government should improve skills training, infrastructure and access to finance, he said.
Data published on Wednesday showed a sharp fall in manufacturing in July and a sharp widening of the trade deficit, underscoring the reliance of Britain's economic recovery on the services sector.
Economists say consumer spending will help drive the economy in the months ahead as inflation remains close to zero and wage growth picks up.
The BCC said it expected growth in total earnings, including bonuses, would average 2.5 per cent in 2015 and rise to 4.3 per cent in 2017.