According to the National Institute of Social and Economic Research [NIESR] the recovery is now “entrenched” and it expects the economy to grow by 2.5% in 2014 and at the slightly reduced rate of 2.1% in 2015.
The estimates support the Office for Budget Responsibility’s
own forecast and the International Monetary Fund [IMF] and the Organisation for Economic Co-operation and Development [OECD], have also indicated similarly optimistic figures.
also said it expected unemployment to fall below 7% before the end of the year which, although welcome news, could be a headache for the governor of the Bank of England
who used that figure in his earlier “forward guidance” as a possible trigger to consider increasing interest rates.
Despite the general consensus of an improving economic situation,
concerns remain about the continuing low level of business investment and stagnant wage growth which means prices are continuing to rise faster than salaries.
Consumer spending, supported by the housing market, is expected to remain the key driver of recovery over the next two years but it is essential that investment and exports strengthen to make the recover truly sustainable. UK trade data, released later today, will indicate if the country is winning the export battle.
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