The country’s economy remains on course to avoid a technical recession. The growth rate will rise slightly to 0.6 per cent in 2024, and 1 per cent in 2025, BCC said in a release.

Inflation remains the top concern for UK firms, BCC’s programme of business surveys show.

In the short term, the BCC is expecting quarterly GDP to remain flat throughout 2023, with three quarters of 0.1 per cent growth and one quarter of no growth, leading to overall growth of 0.3 per cent for the year.

This is in line with the Bank of England’s forecast, but more optimistic than that of the Office of Budget Responsibility (OBR).

Evidence from recent BCC business surveys also showed a rebounding of business confidence at the start of 2023. This is likely to result in increased investment, with the BCC now predicting business investment to grow by 1.3 per cent in 2023, an upwards revision from the previously predicted level of 0.2 per cent.

However, despite greater political stability, stubbornly high inflation rates and labour market shortages continue to weigh on growth.

Export activity fell back at the end of last year as global supply chain crises and trade barriers with the European Union (EU) disproportionately affected smaller exporters. Exports are likely to decline by 4.7 per cent across this year, a downwards revision from the previous forecast.

Average earnings are expected to grow by 4.5 per cent in 2023 and will lag behind inflation until 2024 when they will increase by 2.6 per cent.

While energy and commodity prices begin to ease, core inflation remains stubborn. The Bank of England interest rate is expected to peak at 4.75 per cent in the second half of 2023, higher than the previous forecast of 4.25 per cent. It is expected to fall to 4 per cent in 2024, and 3.75 per cent in 2025.

Overall investment is expected to increase by 0.7 per cent in 2023, up from the previous forecast of minus 1.5 per cent.

The picture for 2024 is more uncertain, with investment predicted to contract by 0.4 per cent in the year.

The labour market is expected to remain tight as a record number of organisations report recruitment difficulties in the BCC’s business surveys, particularly in the hospitality, retail and manufacturing sectors.

However, some modest growth in the unemployment rate is expected, rising to 4.1 per cent in 2023 and 4.4 per cent in 2024 as the number of vacancies begins to fall.

Fibre2Fashion News Desk (DS)