The British Chambers of Commerce (BCC) has warned against a premature rise of UK interest rates.
Interest rates have remained at a historic low of 0.5 per cent since 2009, but there has been speculation that they could rise in the coming months. Earlier in the month, the Bank of England announced that rates would remain unchanged but there was a split in the Monetary Policy Committee (MPC) for the time since July 2011.
Members Ian McCafferty and Martin Weale voted in favour of a 0.25 per cent rise to 0.75 per cent but were subsequently outvoted. However, the Bank's governor Mark Carney hinted that there could a change in rates towards the end of 2014 or into next year. There are suggestions that an alteration could come in the build-up to the May 2015 general election.
The BCC downgraded its forecast for UK gross domestic product (GDP) growth from 3.2 per cent to three per cent for the remainder of the year. There were further drops for both 2015 and 2016 with the BCC reporting 2.6 per cent and 2.4 per cent respectively. It described these changes as being an "ominous warning sign".
John Longworth, director general of the BCC, said: "Downgrades to our growth forecast are a warning sign that we still face a number of hurdles before securing a balanced and sustainable recovery. A number of headwinds from the global economy are also having a real impact on British businesses."
While a slight increase in interest rates is expected in the third quarter of 2015, the BCC expects this to rise even further, reaching 1.75 per cent by the end of 2016. Despite the organisation downgrading its estimates for the coming years, 2014 will still represent the fast rate of growth for seven years in the UK.
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