Britain ‘to suffer weak growth’

Britain will avoid a new recession in 2012, but economic growth will be slow.

This was the conclusion of the British Chambers of Commerce (BCC) in its Quarterly Economic Survey for the first quarter (Q1) of 2012.

Its study found matters have improved on the final quarter of 2011, with most firms indicating the situation is improving, but overall weakness remains.

One particular feature was that while manufacturing is quite strong, the service sector is not, with this prompting the organisation to forecast weaker growth than the Office for Budget Responsibility (OBR).

Summarising the situation, BCC chief economist David Kern said: "On the basis of this survey, we are now predicting quarterly GDP growth of 0.3 per cent in Q1 2012, in line with the OBR's recent forecasts. However, growth is likely to remain low for some time and a return to a more normal pace is unlikely until 2013."

He suggested the overall growth figure for 2012 will be 0.6 per cent, lower than the OBR expects due to the continued potential of the eurozone crisis to cause problems and indications that the fall in inflation might be slower than previously anticipated, due to rising oil and food prices.

Slow growth will be bad news for those struggling with debt, not least as it could prevent those who are out of work or who could benefit from a higher-paid job from being able to get one.

However, the survey did show the most positive balance of firms looking to recruit new staff since the second quarter of 2011.

The overall projection that Britain will avoid a recession but endure slow growth has been widely predicted, but the Organisation for Economic Co-operation and Development recently suggested Britain was returning to recession with an economic contraction in the first three months of the year.

By James Francis