British Chambers of Commerce urges Osborne to boost growth

The UK will avoid a double-dip recession but economic growth in 2012 will be slower than last year, a leading business group has forecast as it urges the chancellor to come up with new ways to boost the recovery in the budget. The British Chambers of Commerce (BCC) has cut its growth forecast for 2012 to just 0.6%. It had been expecting growth to match 2011's 0.8% rate but is warning that cutting debt levels that are "still too high" will depress demand and "result in a relatively long period of low growth". It also warns that growth will probably weaken over the second quarter because of the additional bank holiday for the Queen's diamond jubilee while the London Olympics in the third quarter may also distort growth figures. Against that backdrop it sees unemployment rising further this year. The organisation continues to expect growth to pick up to 1.8% in 2013, driven largely by net exports and business investment. But overall it warns that the UK faces a long haul out of the downturn with GDP and consumer spending returning to pre-recession levels in the second half of 2014. The BCC, which represents 100,000 businesses, is calling on George Osborne to put as much emphasis on growth as on deficit reduction. It argues that focusing on austerity alone could prove counter-productive. "There is a danger that anaemic growth could lead to missing the net debt target and result in government debt rising," the BCC says in its latest economic outlook. Its director general, John Longworth added: "The UK economy faces serious challenges, with problems in the eurozone creating difficulties for exporters, combined with dampened domestic demand.. The BCC is calling on the Treasury to scrap a "swingeing" 5.6% business rates rise expected in April, bring in a credit easing programme as promised and to give more help to small and medium-sized businesses trading internationally. The BCC's assertion that Britain would avoid recession – technically two consecutive quarters of contraction – follows a recent run of upbeat economic indicators. A separate report out on Monday echoes that view, indicating business confidence rose for a second consecutive month in February. All regions and sectors were positive about the economic outlook, according to the Lloyds Bank Wholesale Banking and Markets business barometer. But Trevor Williams, chief economist at Lloyds Bank Wholesale Banking and Markets, warned the confidence measure remained below its long-run average and that confidence was likely to remain fragile. "With the economy likely to 'bounce along the bottom' for the foreseeable future we should not be surprised if businesses' confidence falls back over the coming months," he said.