The British Chambers of Commerce downgraded the growth outlook for the U.K. citing slower than expected growth in services, household consumption and exports.
The business lobby lowered its growth forecast for 2014 to 3 percent from 3.2 percent, but this figure still represents the fastest growth experienced by the British economy since 2007.
The forecast for 2015 was downgraded to 2.6 percent from 2.8 percent and that for 2016 to 2.4 percent from 2.5 percent.
Quarterly GDP growth is forecast to remain at 0.7 percent in the fourth quarter of 2014 followed by a slowdown to 0.6 percent per quarter from the first quarter of 2015 onwards, it said.
BCC Director General, John Longworth said he believes the downgraded forecast is an ominous warning sign and urges the government to waste no time in addressing key areas that are holding back good firms, such as access to capital to grow their business.
The BCC expects the first increase in interest rate to 0.75 percent to occur in the third quarter of 2015.
According to BCC estimate, the jobless rate will fall to 5.6 percent in the third quarter of next year and to 5.2 percent in the third quarter of 2016.
The BCC estimates U.K. productivity to remain weak in the next few years, increasing at a pace that is slower than before the financial crisis.
The National Institute of Economic and Social Research said Tuesday the U.K. gross domestic product grew 0.7 percent in the three months to November, the same rate of growth as seen in the three months to October.
The think tank earlier projected 3 percent annual growth for 2014 and 2.5 percent for 2015.
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