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9 September 2009 Business remains cautious on economic recovery prospects

While the UK economy may be showing signs of recovery, it still faces some significant risks, the British Chambers of Commerce (BCC) has warned.

In its latest Economic Forecast, the business group has revised down its GDP expectations for this year, predicting a decline of 4.3%. However, it was more positive in its predictions for 2010 and 2011, forecasting economic growth of 1.1% and 1.9% respectively.

The BCC has highlighted a number of factors which could weaken UK growth prospects, including consumer debt, high unemployment, a fragile banking sector and weakness in bank lending, weak growth in the eurozone, and high levels of government borrowing.

David Frost, BCC Director General, said, 'The UK's recovery requires a thriving business sector, so it is vital that new business taxes, higher National Insurance contributions, and any measures that may damage enterprise and job creation are avoided'.

Meanwhile, David Kern, BCC Chief Economist, said, 'The upturn in the economy has probably already started and we could see a relatively strong bounce-back in the next few quarters. But sustaining the recovery will be very challenging and the risks of a relapse are high'.

The BCC is calling for public spending cuts to be made in all areas, except for vital business infrastructure expenditure.