A shopper walks past an empty retail unit in Nottingham, central England, June 6, 2013.
CREDIT: REUTERS/DARREN STAPLES
(Reuters) - Britain's economy will expand at its fastest rate in seven years in 2014, thanks to strengthening household consumption, but high household debt will slow growth in 2015, the British Chambers of Commerce (BCC) said on Thursday.
The business group forecast economic growth to rise to 2.7 percent in 2014, an upgrade from the forecasts of 2.2 percent it
made as recently as August.
made as recently as August.
Output should pass its pre-recession peak in the second half of the year, more than six years after the financial crisis began, the BCC said.
The group also raised its estimate of 2013 growth to 1.4 percent from 1.3 percent but reduced the 2015 forecast by 0.1 percentage point to 2.4 percent, saying high household debt would limit consumption.
BCC Director General John Longworth warned that recovery could not come from households and an accelerating housing market alone, echoing comments earlier this week from Bank of England Governor Mark Carney.
"We have to find ways of boosting business investment and exports, as rebalancing oureconomy is critical to our long-term economic future," Longworth said. "Young, growing firms, and many SMEs, continue to struggle with lack of access to available credit, while consumers are getting the support they need to buy homes."
The BCC expects business investment to fall by 5.3 percent in 2013, then recover to rise 5.7 percent in 2014 and a similar amount in 2015, as companies take confidence from a stronger economy.
to fall by 5.3 percent in 2013, then recover to rise 5.7 percent in 2014 and a similar amount in 2015, as companies take confidence from a stronger economy.
The BCC also said unemployment would fall to 7 percent - the level at which the Bank of England has said it would start to think about raising interest rates - in the third quarter of 2015, one quarter earlier than previously forecast, but it urged the BoE to make sure the recovery was firmly established.
The group foresees the first BoE rate rise in the fourth quarter of 2015.
BY FREYA BERRY
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