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The British Chambers of Commerce has downgraded its expectations for UK GDP growth for 2022 to 3.5% (from 3.6%) against a deteriorating economic outlook. It now expects the UK inflation rate to reach 10% in Q4 2022, comfortably outpacing average earnings growth.

The heightened economic uncertainty and rising costs are also expected to significantly weaken business investment, with 1.8% growth predicted in 2022, down sharply from 3.5% in the previous forecast.

Key points in the forecast:   

• UK GDP growth forecast for 2022 is 3.5%, 0.6% in 2023 and 1.2% in 2024
• Following Q1 2022 growth of 0.8%, quarter-on-quarter GDP growth is forecast to come to a halt with zero growth in Q2 and Q3, before a 0.2% contraction in Q4 2022.
• Household consumption forecast is for growth of 4% in 2022, growth of 0.6% for 2023 and 1.2% in 2024
• Business investment forecast is to grow by 1.8% in 2022 before more than halving to 0.8% in 2023, amid the end of the super deduction and the corporation tax rise, and then rising to 1.5% in 2024
• BCC expects export growth of 3% in 2022, 2.3% in 2023 and 1.6% in 2024, compared to import growth of 6.9%, -2.7% and 1.7%
• BCC expects UK unemployment rate of 3.8% in 2022, 3.9% in 2023 and 2024
• CPI inflation is forecast to peak at 10% in Q4 2022, before easing to 3.5% by the end of 2023. Inflation is expected to drop back to the Bank of England’s 2% target by Q4 2024
• UK official interest rates are expected to rise to 2% by Q4 2022 and then to 3% in Q4 2023, ending 2024 at the same level.

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