In an announcement released by the British Chambers of Commerce, the BCC forecast yet another downgrade in a line of downgrades throughout 2011. Their reasoning behind this latest downgrade to the economy’s prospects is that the government is not rebalancing the economy as they had aimed to do.
According to the BCC, government had aimed at rebalancing the economy with business investments and exports but have not implemented their strategies quickly enough to affect any change. As a result, the total forecast is down by .8% since January when they forecast a 1.9% expansion of the economy.
In June, the BCC gave an estimate of a 1.3% growth whilst the latest forecast is 1.1%, having lost another .2% in just two months. Amidst this news, Treasury has not commented and declines to do so. However, David Frost, director general of the BCC stated that government has much more to do to make an impact on the UK deficit while also helping companies to grow.
Part of the problem, according to Frost, is regulations that are currently burdening firms in the UK. Unless policies are made right, he feels that any recovery will be slow in coming, weak and quite short-lived. One of their strongest recommendations is to simplify the planning system. He further states that the current system is actually broken.
As an example of just how broken the planning system is, Frost noted the Midlands’ M6 toll road that took 18 years to plan and only three years to construct. With changes in the planning system, Frost believes things could get moving again, stimulating economic growth. As a result of previous downgrades in economic forecast, the BCC has also cut the economic growth forecast for the coming year. They now predict growth in 2012 to be 2.1% down from 2.1% , their previously released forecast.