BCC warns economy can slip into recession again

The British Chambers of Commerce has warned that the UK's fragile economy could slip back into the clutches of recession due to greater obstacles to the sustained medium-term recovery.

The BCC downgraded its expectations for economic growth in 2011. It has lowered it expectations for GDP growth in 2011 from 2.3 per cent to 2.1 per cent.

Speaking on the topic, BCC Director General David Frost said, "The recession may have technically ended, but there is no room for complacency."

The UK economy emerged from recession in the final three months of 2009 by reporting 0.3 per cent GDP growth.

For the current year, it maintained its GDP growth forecast at 1 per cent.

However, it added that unemployment would peak at 2.65 million by the third quarter of 2010, down from previous estimates of 2.7 million.

The business organization also predicted that the public sector borrowing would jump to £165 billion in 2010-11 before coming down to £147 billion in 2011-12.

Mr. Frost urged the government to discard the 1 per cent increase in National Insurance contributions planned for April 2011. Instead, he suggested the government to increase the Value Added Tax by 1 per cent to 18.5 per cent.