Growth forecast for UK cut by 0.2%

The British Chambers of Commerce has cut its growth forecasts for the UK economy for both 2011 and 2012.

In its latest quarterly economic forecast, the BCC predicts the economy will increase by 1.1% in 2011, revised down from 1.3%, and forecasts growth of 2.1% for 2012, down from a previous estimate of 2.2%.

The BCC says growth will be modest during the coming quarters, estimated at 0.3% in Q3 2011, 0.5% in Q4 2011 and 0.6% in Q1 2012.

It says unemployment will peak in Q4 2012 at 2.62 million, revised up from a previous estimated peak of 2.6 million in Q2 2012.

It also predicts the base rate will first rise in August 2012, reaching 1% in Q4 2012 and 2.25% in Q4 2013.

The BCC says that lower global growth prospects mean interest rates will need to stay low for longer than previously expected.