The BCC Has Upgraded The Rate At Which It Thinks The UK Will Grow By

The British Chambers of Commerce (BCC) has announced the upgrading of its UK economic growth forecast.

Analysts at the organisation believe that output will rise by 3.2 per cent in 2014 - a rise of 0.1 per cent from its previous prediction of 3.1 per cent.

One of the main factors behind the decision was a stronger than expected labour market, which will increase both purchasing power among the newly employed.

In addition to this, heightened hiring levels show confidence among upper executives that their firms' long-term growth prospects are good.

The BCC also said that the Office for National Statistics' (ONS) decision to upgrade its estimates for year-on-year growth from the second quarter of 2013 to 2014 were part of its reason for the increase.

However, analysts still remain confident that their new prediction of 2.8 per cent growth in 2015 will be accurate, as household consumption will slow to a more sustainable rate.

Speaking to the BBC, BCC director-general John Longworth said: "We need to invest and export more, innovate, and build. We must ensure the stellar growth in 2014 is not a flash in the pan."

The BCC's estimate is substantially more optimistic than the Office for Budget Responsibility's forecast, which sets growth in 2014 at 2.7 per cent.

David Kern, chief economist at the BCC, called on the Bank of England's Monetary Policy Committee to ensure that "unwelcome surprises" are avoided when interest rates start to rise.

More hawkish analysts are pushing for a quicker rate increase, but there have been concerns that this could cause a rapid rise in the rate of inflation, making day-to-day life more difficult for middle and low income families, who have seen their spending power reduce in recent months.

"Even with greater clarity over policy, growth is likely to slow markedly after mid-2015, as higher interest rates put pressure on the finances of indebted households," Mr Kern said.

Expert Opinion

This is yet another study which indicates more positive times ahead for businesses, so it is vital that companies of all sizes plan accordingly and ensure that they are ready for everything that the future may hold. <br/> <br/>"A key aspect of proper planning is having the right support network in place to advise on core aspects. This must include legal advice on a range of issues from employment matters such as recruitment policies to real estate or finance matters. <br/> <br/>"Having the right foundations in place will make a major difference and ensure that small businesses in particularly are able to thrive as more and more opportunities come their way." Steven Beahan - Partner