Business groups lower GDP growth forecasts
UK business groups have cut forecasts for growth this year, calling for stronger action from the government to boost recovery.
The British Chamber of Commerce announced today that it has revised its 2012 forecasts down from 0.1 percent growth to a 0.4 percent contraction. The outlook for 2013 has also been lowered, from 1.9 percent growth to 1.2 percent.
The BCC claims that while there is plenty of opportunity for businesses to boost the economy, the onus lies on the government to introduce more “radical” policies for growth, both in the short and long term.
Director General John Longworth lay the blame on the Coalition government’s relentless deficit reduction drive, demanding “political backbone” to lead the country in a new direction. He warned a vicious cycle of stagnation would persist otherwise.
BCC figures show that business investment has remained strong so far this year, with eight percent growth in the first half of the year. In full year terms business investment is expected to grow by 4.5 percent in 2012, and five percent in 2013.
Meanwhile the Confederation of British Industry yesterday lowered its GDP forecasts from 0.6 percent growth to a 0.3 percent contraction in 2012. CBI business investment figures were five percent for 2012, lowering next year to 3.8 percent.
The view from the channel is less clear. Some channel players are faring well despite the tough environment, such as Softcat which recently burst through the £300 million revenue mark, but concerns remain over the ability of the government to get growth back on track.
One distributor told ChannelBiz UK that the outlook for business going into 2013 is “not very optimistic” without further measures to support business put into place from the government.
“People are saying that business will pick up in the new year – but why in the new year are things going to change? I don’t think it is going to pick up for at least a year.”
Investment in business is still a priority however: “I personally will still plough what I can into my business to make it prosperous. You have to speculate to accumulate.”
Measures such as the further cutting of corporation tax – already set to fall to 23 percent next year – and dropping fees on petrol would help those distributing in the IT channels, along with businesses across the country.
“The government ought to cut corporation tax to support business, they are doing it slightly,” we were told. “They also ought to cut petrol [prices], because it affects the country as a whole.
“Whatever I order has got to come to me and it’s got to be paid for, people don’t send you stuff for nothing – that’s true for any company.”
A recent study by Moore and Smalley Chartered Accountants and Business Advisors showed that 20 percent of businesses believe that corporation tax should see further drops after it is decreased next year.