The British Chambers of Commerce (BCC) has painted a gloomy picture of the UK’s economy.
It suggested technical recession is possible as the economy is expected to fall into negative growth in two consecutive months before March 2009.
Economic advisor David Kern explained: “Our view is that the threats to growth are more serious and more immediate than the risks of higher inflation.”
He suggested: “The UK economy urgently needs an interest rate cut to counter threats of recession.”
In its August forecast, the BCC predicted unemployment will rise between 250,000 and 300,000 and the government will breach its ‘golden rule’ on borrowing.
It strongly advised against raising business tax, saying any hike must be “forcibly resisted”.
Economic adviser David Kern warned: “A marked slowdown in UK activity is highly likely over the next 18 months, even if interest rates are cut in line with our central forecast.”
Commercial property investors are hoping to see their values recover after witnessing them fall for the last 18 months.