British Economy Expected To Expand By 2.8% This Year

The British Chambers of Commerce (BCC) has adjusted its growth forecast for the UK economy and now expects gross domestic product (GDP) to surpass pre-financial crisis levels by the second quarter of 2014.

It predicts a 2.8 per cent GDP expansion this year - up from its previous estimate of 2.7 per cent, which was made in December 2013.

If this proves to be accurate, it would mean the economy has finally surpassed the peaks recorded in 2008, prior to the global financial meltdown.

According to the BCC's latest release, the pre-recession highs could be exceeded in the second quarter of the year, which is three months earlier than it originally thought.

The organisation has also raised its forecast for GDP in 2015 from 2.4 per cent to 2.5 per cent.

This is great news for small business owners who have found the going extremely tough over the past six years. Banks became risk-averse and were reluctant to issue loans to small and medium enterprises (SMEs), which hindered growth.

However, there have been signs to suggest lenders have become a little more adventurous in the past six months and the BCC believes business investment will increase by 6.6 per cent in 2014. This will be followed up by a 5.7 per cent upturn in both 2015 and 2016, the body suggested.

John Longworth, BCC director general, said the economy is "gaining momentum" and he hailed the nation's multitude of businesses for creating jobs in very testing conditions.

He added that the services sector is performing particularly well and manufacturers are also reporting rising levels of output.

"Businesses across the UK are expanding and creating jobs, and our increasingly sunny predictions for growth are a testament to their drive and ambition," Mr Longworth remarked.

That said, the BCC chief warned that companies should not get too carried away at this stage.

"It's not time to break out the champagne glasses just yet," he commented, before adding that significant challenges remain, such as poor levels of youth employment.

Despite the BCC predictions, Mr Longworth thinks levels of business investment are still subdued and he has urged the government to use the upcoming Budget announcement to rectify this.

Expert Opinion

The positive news provided in these figures chimes with the trends which have been emerging in recent months, with the economic climate looking increasingly positive for businesses of all sizes. <br/> <br/>"All of this is very encouraging for small businesses, which are well-placed to take advantage of the multitude of opportunities that are set to emerge as this recovery continues. <br/> <br/>"However, one of the key priorities for SMEs at present has to be the need to have the right network of support in place so that they can work to achieve their ambitions. Central to this is having access to quality legal advice, with lawyers able to provide advice on a range of regulatory matters from employment and contract law to other key business concerns such as data protection and real estate." Steven Beahan - Partner