September is here and with another wonderful Bournemouth Airshow splashing Dorset across the world, it’s time to look ahead for UKplc.

Our colleagues at The British Chambers of Commerce (BCC) have done just that. In revising its economic growth forecasts, the BCC considers growth is gathering momentum, but recovery is not yet secure.

Key figures from the updated forecasts include: n GDP growth in 2013 is now expected to be 1.3 per cent (previously 0.9 per cent) and 2.2 per cent (previously 1.9 per cent) in 2014.

  • The service sector will continue to outperform other sectors, with full-year growth of 1.9 per cent in 2013 and 2.6 per cent in 2014.
  • Unemployment is expected to fall to 2.45 million (7.5 per cent of the workforce) by Q3 2014, some 200,000 lower than predicted in May.
  • Public sector borrowing is forecast at £116.3billion in 2013/14, £3.5billion lower than the predictions in March.

The BCC chief economist, David Kern, commented that the new forecasts signalled an improvement in the UK’s economic prospects but reducing the structural fiscal deficit continues to be a long and painful process. Tax receipts remain inadequate and cuts in current spending will be needed until 2019 at the earliest. Higher domestic inflation could also threaten the recovery, particularly if the MPC was to sanction further increases in quantitative easing, which could lead to sharp falls in sterling. This would harm our economy far more than the minor benefits to exports that a weak sterling would provide.

Whilst the rebalancing of the economy towards exports is not yet sufficient, good progress has been made. The real trade deficit in goods and services has more than halved in the last three years and the surplus in services continues to play a key role in narrowing our trade gap.

The BCC would like to see more growth coming from investment and net trade, but feels we should not be too concerned that consumer spending is helping to drive the recovery. It is better to rely initially on the consumer than to have no growth at all.

The new Monetary Policy Committee strategy of forward guidance should help to create a more stable economic environment by combining adherence to the inflation target with commitment to low interest rates.

This means that companies will still have a reasonably long period in which to plan and invest, which is good for business confidence.

Despite some caution, the signs for 2014 are looking good. Bring it on!