Not only has it slashed its forecast for growth for the fourth time this year, but the British Chambers of Commerce (BCC) is predicting that the upturn will not happen until late next year.

Its quarterly economic forecast said that its forecast had been downgraded because the impact of the Eurozone debt crisis has been more serious than expected.

The BCC now predicts that gross domestic product (GDP) growth will be 0.9 per cent in 2011 (down from 1.1 per cent in the September forecast), 0.8 per cent in 2012 (down from 2.1 per cent), and 1.8 per cent in 2013 (down from 2.5 per cent).

Bearing that in mind, it is not surprising that it also predicts a decline in consumer spending, expecting it to fall 1.2 per cent in 2011, followed by modest growth of 0.5 per cent in 2012 and 1.6 per cent in 2013.

With weak growth and rising unemployment, the BCC also predicted that interest rates would remain at 0.5 per cent until at least the fourth quarter of 2012, rising slowly to hit 1.5 per cent in the last quarter of 2013.

It also expects the Bank of England’s Monetary Policy Committee to increase its quantitative easing programme from £275 billion to £325bn.

“The challenges facing the UK economy have grown in recent months. Uncertainty surrounding the Eurozone will delay a significant upturn in growth until late in 2012,” said BCC director-general John Longworth.

“We expect inflation to fall sharply, which is positive news for businesses and consumers, but we will be faced with rising unemployment for some time to come.”

However, he added that there was no need for doom and gloom.

“The UK economy has the potential to recover and thrive,” said Mr Longworth. “Our economic prospects will improve, but not overnight.”

BCC chief economist David Kern added: “Though we believe a recession will be avoided, the risks cannot be shrugged off.”

He pointed out that the BCC’s forecast indicated that GDP will only return to its pre-recession level in 2014 and that consumer spending would only rise to its pre-recession level in 2015.