Britain’s economic growth will halve this year as a result of soaring inflation, hefty tax rises and the destabilising shock from the war in Ukraine, a leading business lobby group has warned.
In the first major forecast of the UK economy since the Russian invasion of Ukraine, the British Chambers of Commerce (BCC) said it expected an inflation rate of 8% to cut disposable incomes in 2022, putting the brakes on the recovery from the pandemic.
In its previous forecast, the BCC expected GDP to expand by 4.2%, but after a wide ranging review it said growth would fall to 3.6% – less than half the 7.5% expansion in national income seen last year.
The BCC said the size of the economy would surpass its pre-pandemic level over the next few months, but was likely to struggle as consumer confidence, which collapsed last month as the full weight of the cost of living crisis became clear, dropped further over the coming months.
Suren Thiru, head of economics at the BCC, said he now expected inflation to peak at 8% and interest rates to increase to 1.5%, adding to the burden on households and…
