British chamber cuts UK's 2011 outlook
The British Chambers of Commerce (BCC) on Sunday cuts its expectations for UK economic growth next year, although it raised its forecasts for the following year.
The BCC reduced its forecast for UK gross domestic product (GDP) growth in 2011 to 1.9 percent from a previous forecast of 2.2 percent and raised its prediction for 2012 growth to 2.1 percent from 1.8 percent.
It said the cut to its 2011 forecast reflected the impact of the eurozone debt crisis on Britain and the fact that the effect of the government's austerity measures would be more serious than expected, partly due to falling house prices.
"The fiscal austerity programme entails risks, particularly in the next few quarters. We expect a sharp slowdown in the pace of UK growth starting in Q1 2011, in reaction to the VAT rise to 20 percent and as tough deficit-cutting measures are implemented," said BCC Chief Economist David Kern.
"Consequently, year-on-year GDP growth, after rising to 3.0 percent in Q4 2010, is forecast to fall sharply to 1.4 percent in Q3 and Q4 2011, and stay below 2 percent in the early months of 2012," he added.