Slowdown ‘to last until 2009’

The British Chambers of Commerce has warned that the economic slowdown in the UK is likely to last longer than had previously been thought.

The business group believes consumer spending will remain subdued until the end of 2009 and called on the Bank of England to lower interest rates in a bid to prevent a full-on recession.

"The longer the monetary policy committee waits now, the bigger the danger that the situation would deteriorate and the policy choices would become more difficult and more unpleasant later in the year," said David Kern, economic adviser at the BCC.

"Waiting unduly before easing further would pose unacceptable threats to growth," he added.

The Bank of England kept interest rates on hold at 5% in May but many analysts now believe rates will decrease by 0.5% before the year is out.