The British Chambers of Commerce has cut its forecast for the UK’s economic growth in 2015 after citing a weak start to the year.
It said in a report that Britain’s economy will expand by 2.3 per cent in 2015, which is down from its previous forecast of 2.7 per cent.
However, despite expecting a steady recovery, it warned the country’s vast trade deficit is a “timebomb”.
“While this slowdown will serve as a warning about the strength of our economic recovery, we believe the UK will secure steady growth in the years to come,” said John Longworth, the BCC’s director general.
Economists polled by Reuters expect Britain’s economy will expand around 2.5 percent this year and 2.4 percent in 2016.
The BCC said it expected a hefty pick-up in earnings over the next few years, and further declines in Britain’s unemployment rate.
But it warned the recovery has been too reliant on consumer spending, and highlighted Britain’s trade deficit as the most pressing worry.
The goods trade deficit widened in the first quarter of 2015 to nearly 30 billion pounds ($41 billion), underscoring one of the economic challenges facing the Government following elections.
“The trade deficit is an economic time-bomb waiting to go off. We have to confront it head-on and that means getting more of our businesses exporting their goods and services overseas,” added Mr Longworth.
The BCC pushed back by three months its forecast for the next Bank of England interest rate hike from a record-low 0.5 percent to the second quarter of 2016 – slightly later than the Reuters poll consensus.
Last month, BoE Governor Mark Carney said last month it was “possible” that interest rates would be higher in a year’s time from now.