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Growth 'will be faster for next two years'

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The British Chambers of Commerce has increased its growth forecast for the British economy this year from 2.6% to 2.7%, amid expectations that interest rates will stay lower for longer. The organisation also predicts a relatively robust pace of growth at 2.6% will be sustained for another two years. The BCC made its upgrade on the back of stronger-than-expected growth in consumption and a healthy services sector, but it did issue a warning that the next government needs to make concerted efforts to move away from the economy's reliance on consumption, and towards exports and business investment, the latter of which has slowed down this year amid uncertainty over the result in May's general election. The report's conclusion that interest rates will stay lower was based on shrinking food, oil and other commodity prices pushing up short-term growth and reducing inflation. The BCC pushed back its forecast for the first rise in base rate from the present 0.5% from the third quarter of 2015 to the first quarter of 2016.

 

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