THE government’s deficit reduction plans received a boost from the British Chamber of Commerce (BCC) yesterday despite the organisation downgrading its growth forecasts for the UK economy.
The BCC slashed its growth prediction on Sunday from 1.4 per cent to 1.3 per cent, with growth for 2012 also being cut from 2.3 per cent to 2.2 per cent. The government’s Office for Budget Responsibility has forecast growth of 1.7 per cent for this year and 2.5 per cent for 2012.
The BCC said the government’s tough austerity measures, combined with higher than expected inflation, will squeeze disposable incomes, meaning economic recovery would be slower than previously thought.
But David Frost, director general of the BCC, told the BBC: “We have huge levels of debt in this country. Even this year we’ll be spending about £124bn more than we’ll be getting in taxes. We have to deal with this.”
The defence came after Treasury committee chairman Andrew Tyrie branded plans to rebalance the UK economy as an “incoherent mish-mash”. He said: “There are half a dozen ways to define what rebalancing means and I don’t think ministers have used the term with sufficient precision.”