Leading business group, the British Chambers of Commerce (BCC), has downgraded its growth prospects for the UK economy.
The BCC now expects the economy to grow by 1.3% this year, slightly lower than a previous forecast of 1.4%.
The figures are much lower than the 1.7% expected by the Office of Budget Responsibility but are roughly in line with last week’s forecast of 1.4% from the Organisation for Economic Cooperation and Development (OECD).
Meanwhile the BCC expects the economy to expand 2.2% in 2012, marginally lower than its previous estimate of 2.3%.
The business group attributed the revised growth forecasts on higher inflation which is impacting on household finances and expected to impact negatively on economic growth.
However, the BCC said it supports the Government’s ongoing efforts to trim the budget deficit.
Over recent months, many business groups and economists have said the spending cuts, introduced to slash the deficit, could cause the economic recovery to falter.