The British Chambers of Commerce has upgraded its UK growth forecasts for the next three years, saying the figures are encouraging but recovery is still not secure. Export activity is also reported to be at record levels but manufacturing figures have declined, with only a small output increase expected in 2014.
UK growth forecasts have been upgraded from 0.9% to 1.3% in 2013, from 1.9% to 2.2% in 2014, and from 2.4% to 2.5% in 2015, by the BCC in its Q3 economic forecast. This is mainly the result of a better than expected Q2 GDP figure this year of 0.7% and an increase in business exports has also contributed. UK GDP growth is forecast to average out at 0.6% per quarter for the second half of 2014 and during 2015 as a result.

The BCC has urged the Government and the Monetary Policy Committee (MPC) not to become complacent, and do everything in their power to ensure that our economic recovery moves from good to great. It also says that many challenges still remain.

Manufacturing output declined by 1.7% in 2012 and it is forecast to fall by a further 0.8% in 2013. This is despite news from the Confederation of British Industry last week that it had recorded that British manufacturing had reached a two year high, with 37% of firms reporting rising output. However, the BCC is predicting a modest growth of 1.1% next year and 1.3% in 2015.

Construction output has been weak in recent years, with a hefty 8.3% decrease for the whole of 2012. Even though output rose by 1.4% in Q2 this year, the BCC expects it will fall slightly further for the whole of this year, but then a positive (although slow) growth of 1.5% will follow in 2014.

John Longworth, director general of the BCC, said of the overall figures: "The improved outlook is testament to the steadfast determination shown by businesses in previous quarters, who have consistently displayed confidence in the face of unwarranted pessimism over the economy.

"The government simply cannot divert attention away from growth, and must adopt measures to foster an enterprise-friendly environment in which businesses can continue to create jobs, invest and export. Unfortunately, however, the recovery is not yet secure. We have had false dawns in recent years and although this upturn appears to be on stronger ground, we must be aware that complacency could lead to setbacks."

Within business investment, due to the falls at the end of last year and in Q1 of this year, the BCC expects to record a fall of 2.8% for the whole of 2013. However, this is expected to be followed by respectable positive growth next year of 4.2%.

Official UK interest rates will remain at 0.5% until Q4 2015, and will rise "modestly" after that.