British businesses are facing two very difficult years, with high unemployment, which needs urgent action by the government, the British Chambers of Commerce said here on Monday.
In its quarterly economic forecast published on Monday, British Chambers of Commerce highlighted a significant worsening in British economic prospects, saying "there is now a distinct possibility of technical recession."
Britain's Unemployment is likely to increase by some 250,000-300,000 over the next two to three years, the report said.
"The longer the MPC waits before cutting rates, the bigger the danger that the situation will deteriorate, and the policy choices will become more difficult and unpleasant," the report said.
"Government temptation to raise business taxes because it is running out of money, must be forcefully resisted," the British Chambers of Commerce said.
"Whilst a marked slowdown in activity is likely over the next 18 months, even if interest rates are cut when inflation peaks, the correct policy decisions are still needed to ward off the threats of a serious and prolonged recession," said David Frost, director general of British Chambers of Commerce.
"The longer the MPC waits before cutting rates, the bigger the danger that the economic situation would deteriorate," Frost said.
The level of British unemployment is believed to increase to nearly 300,000 over the next few years, reaching almost 2 million.
"Over the next two or three quarters, we expect UK GDP growth to be slightly negative or zero. Thereafter, we expect a shallow recovery, but the period of weak, below-trend, growth is likely to be prolonged, lasting until the final months of 2009 or early in 2010," David Kern, an influential economist said.
The central bank, Bank of England released its Inflation Report on Aug. 12, saying that the rising food and energy prices have pushed up CPI inflation to 4.4 percent in July, and decided "it was appropriate to maintain bank rate at 5 percent."
Source:Xinhua
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