The British Chambers of Commerce just cut its forecast for the UK’s economic growth in 2015 after citing a weak start to the year.
It said in a report that Britain’s economy will expand by 2.3% in 2015, which is down from its previous forecast of 2.7%. Although it thinks the slowdown is temporary, the BCC said that it will affect its growth forecasts.
It predicts that the British economy though will expand in 2.6% in 2016 and 2017.
A poll of economists by Reuters showed that the UK economy is expected to expand by 2.5% in 2015 and 2.4% in 2016.
But the biggest problem the BCC sees for the British economy is the trade deficit– the excess of imports over exports.
“The one area which causes most concern is the increasing trade deficit. The growth we see is built on consumer spend and this has been a systemic weakness for years,” said John Longworth, Director General of the BCC. “Despite good intentions, we are heading the wrong way. The trade deficit is an economic time-bomb waiting to go off.”
“We have to confront it head-on and that means getting more of our businesses exporting their goods and services overseas. Restructuring our economy in this way remains the best route to securing high levels of sustainable growth over the long-term.”
The BCC has forecasted a rise in the real net trade deficit for 2015. It believes that it will increase from 2.7% to 2.9% this year. Increases in real exports are predicted of 3.6% in 2015, 2.0% in 2016 and 2.2% in 2017. For real imports the BCC predicts increases of 4.1% in 2015, 1.5% in 2016 and 1.7% in 2017.