Short-term economy 'better than thought'

The short-term prospects for the UK economy could be better than first thought, according to a business group - which has upgraded its economic outlook to predict higher growth.

Published this week, the latest Economic Forecast from the British Chambers of Commerce (BCC) predicts that UK gross domestic product (GDP) will grow by 1.7% this year and by 2.2% in 2011. This contrasts with the group's lower expectations of 1.3% and 2.0% respectively, contained within its June forecast.

Nevertheless, the BCC is warning that medium-term prospects are less rosy. Forecasting a slowing of GDP growth to 1.8% in 2012, it says that the Government's austerity programme and what it terms the "worsening global background" are set to "dampen" UK activity.

Unemployment is set to increase over the next 18 months, the group says, rising to 2.65 million in the first half of 2012.

And despite the BCC saying that it welcomes public spending cuts already made by the Government as it seeks to reduce the budget deficit, it warns that there must be a growth strategy in place.

While business groups have broadly welcomed the numerous cuts already announced in June's emergency Budget, the Government is yet to set out its plans for the years 2011-2012 through 2014-15 - expected to be revealed when it publishes its Spending Review in October. The BCC also pointed to the likely dampening effect of the VAT rate increasing to 20% in January next year.

Director-general David Frost said that British businesses had accepted sacrifices would have to be made over the coming years, "as the tough but necessary austerity measures begin to bite".

However, he warned that deficit reduction without positive growth measures "will not deliver a sustainable recovery".

"There must be a relentless focus on ensuring that business is able to deliver growth and create employment," he added.

"We need policies that rebalance the economy towards wealth-creating businesses, and enable the private sector to invest, export and create new jobs. Failure to get this right poses the biggest risk to recovery."

SMEs encouraged to prepare for 2012

Meanwhile, with two years to go before London stages the Paralympic Games in 2012, the Government has encouraged businesses to improve their access for those with disabilities.

The Department for Business, Innovation and Skills (BIS) says that a million disabled visitors are set to visit the capital during the Olympic and Paralympic period. However - pointing to a report that it commissioned to promote "inclusive and accessible business" - BIS warns that the disabled still represent a "significant but poorly addressed market".

It says that SMEs could be missing as many as one in five prospective clients through poor customer service, and inaccessible telephone systems or printed information.

IMAGE Gareth Fuller/PA Wire

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