By Claire West

Commenting on the new official economic forecast published today by The Office for Budget Responsibility (OBR), David Kern, Chief Economist at the British Chambers of Commerce, said:

“While the new OBR forecast is more realistic than previous official forecasts by the Treasury, we believe it is still too optimistic.

“The adjustment of the 2010 forecast for growth from 1.2% to 1.8% is more reflective of the UK economic climate, though it is a largely historical figure. The growth forecasts for 2011 onwards appear too ambitious, although we agree with the broad underlying assumption that Britain’s medium-term prospects will gradually improve over time.

“We share the OBR’s assessment that the flexibility of the labour market will prevent a major worsening of the situation; however we believe the forecast for unemployment is overly positive.

“Overall, the OBR forecast reinforces our confidence that Britain’s private sector will be able to drive recovery in the face of tough deficit-cutting programme. We can’t be complacent as there are still risks ahead, particularly in the early part of 2011. The government must focus on enabling the private sector to make 2011 a Year for Growth.”