Britain’s economic output will reach pre-recession levels as early as 2014, the British Chambers of Commerce has said.
According to the BCC, Britain’s economy was at its highest point back in the first half of 2008, and has now identified their belief that this level would be matched by the second half of next year.
They also identified that the country’s GDP would increase by 2.7% next year, a value far higher than the 2.2% that had previously been expected.
Despite the positive elements of the announcement, BCC chief John Longworth said that there were still a number of obstacles the country had to overcome in the long term in order to prevent the occurrences of the past reoccurring again.
Mr Longworth said: “It is really great that next year the UK economy is finally expected to bounce back from the deepest recession in modern times.”
But he added: “As household consumption slows in the medium term, we have to find ways of boosting business investment and exports, as rebalancing our economy is critical to our long-term economic future.
“If we make important decisions to fix the long-term structural failure in business finance, continue to deliver a major infrastructure upgrade and do more to support exports, it is possible to achieve not just a good recovery, but a truly great and sustainable economy.”
Last week, the Bank of England announced their intention to refocus their money give not from their ‘Funding for Lending’ scheme to small businesses, rather than on the hot property market.
Bank governor Mark Carney identified his belief that it was more important to bolster the prospects of small businesses, rather than run the risk of the property market overheating.
And with the output estimates in the near future looking positive, and the prospects of small businesses bolstered, the economic future of the country is certainly looking stronger than it was before.
Premature interest rate rise
The BCC also released positive news about the levels of growth for 2013, citing that it would have increased by 1.4% by the end of the year, rather than the previously outlined 1.3%.
However, they decreased their estimate for 2015 to 2.4%, down by 0.1%, arguing that in that year, the levels of personal debt per household would be particularly high and as such their capacity to spend and consume would be temporarily inhibited.
This reiterated the sentiment expressed by Chancellor George Osborne in his Autumn Statement, who warned that the growth levels in the UK would be temporarily stunted in 2015 but would be followed by consistent periods of growth afterwards.
Nevertheless, the BCC had positive news about the future employment prospects of people in the country, revising their prediction for when unemployment would drop below 7%.
“We forecast that the 7% unemployment rate threshold will be reached in [the third quarter of] 2015, one quarter earlier than we predicted in August. However, the [Monetary Policy Committee’s] suggestion that there is a 40% probability that this could be reached by the end of 2014 is too ambitious in our view,” the BCC said.
The Chamber outlined that they believed that interest rates would now prematurely rise by the final quarter of 2015, though they expressed that it would only be to around 0.75%, with a 1% rise expected going into 2016.