The British Chambers of Commerce (BCC) has cut its 2005 economic growth forecast to 2 per cent.
The business lobby group had forecast in May that the British economy would grow 2.4 per cent this year.
But it predicted a slowdown in household consumption and a weak manufacturing sector would drag on activity.
"The slowdown in UK GDP growth is mainly being driven by sharply lower growth in household consumption, as the cooling housing market and the higher personal debt burden dampen spending," the BCC said in its quarterly economic forecast.
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The BCC lowered its forecast for 2006 economic growth to 2.2 per cent from an original 2.3 per cent forecast in its May report.