BCC warns UK of economic relapse and credit rating downgrade
07 Sep 2009
Although the UK economy shows signs of recovery, sustaining it will be very challenging with the risks of a relapse being high and the country's international credit rating will be under threat unless credible measures are taken to curb fiscal deficits and debt, the British Chambers of Commerce (BCC) said in a media statement, yesterday.
Publishing its September 2009 report, the BCC said that the UK will see a large GDP decline of 4.3 per cent in 2009, followed by positive growth of 1.1 per cent in 2010 and 1.9 per cent in 2011.
The report said that unemployment figures will rise, but at a reduced pace as unemployment is likely to rise from 2.43 million to a peak of just over 3 million, or 9.6 per cent of the workforce, in mid-2010.
Public sector borrowing is forecast to total about 12.5 per cent of GDP in 2009-10 and 2010-11. Public sector debt is set to rise to dangerous levels in the next few years, in excess of 80 per cent of GDP.
The BCC believes that the Central Bank's Monetary Policy Committee will use the full £175 billion allocated to the Quantitative Easing (QE) programme and has recommended that the size of the programme be increased to at least £200 billion to ensure that the economy does not falter.
The BCC director general, David Frost said, "All the political parties must demonstrate that they recognise the vital role of wealth-creating businesses in driving a sustainable economic recovery.
