Amid disruption caused by the impact of coronavirus, the British Chambers of Commerce downgraded UK's economic growth projection for 2020.
According to the latest economic forecast, the economy is forecast to grow 0.8 percent this year, instead of 1 percent projected earlier. This would be the weakest growth outturn since 1992 and markedly slower than the 2019 growth of 1.4 percent.
Nonetheless, growth is forecast to pick up to 1.4 percent next year and 1.6 percent in 2022.
Suren?Thiru, head of Economics at the BCC, said, "Our latest forecast indicates that the UK economy faces a challenging short-term outlook."
"It is increasingly likely that the boost from higher government spending and more political certainty, will be surpassed over the near-term by the negative impact of Coronavirus on the UK economy," he added.
In the first quarter of 2020, gross domestic product is projected to expand 0.2 percent followed by a contraction of 0.1 percent in the second quarter. In addition to the impact of coronavirus, the BCC cited a lack of clarity on the future trading relationship with the EU and other economies and struggling global economy to limit the near-term growth prospects of the UK.
The 2020 export growth is projected to be its weakest since 2009. The lobby forecast exports to grow marginally by 0.1 percent in 2020 and 0.9 percent next year.
Business investment is expected to contract 0.7 percent this year. At the same time, household spending growth is seen at 0.9 percent, the slowest since 2011.
Meanwhile, growth is government spending is forecast to be 3.6 percent this year and 3 percent in 2021.
UK official interest rates are expected to rise from 0.25 percent to 0.75 percent by the end of 2020, the BCC said. Interest rates are then expected to rise to 1.0 percent in 2021.