UK Think tank Forecasts British Growth to Accelerate in 2014

UK growth will pick up next year but the economy will remain over-dependent on squeezed consumers, a leading thinktank has warned.

The National Institute of Economic and Social Research (NIESR) forecasts growth will come in at 1.4% this year and quicken to 2% next year. Both those forecasts are up by 0.2 percentage points since NIESR’s last outlook was published in August.

The group attributed the upgrade to a better out-turn for the economy at the start of this year and in the third quarter, when official data put growth at a quarterly 0.8%. The thinktank’s 2% growth forecast for next year is ahead of 1.9% from the International Monetary Fund and 1.8% predicted in March by the the Office for Budget Responsibility (OBR), the Treasury’s independent forecaster. But NIESR argued growth was not built on solid foundations.

“After two years of stagnation, economic growth has returned, underpinned by an increase in consumer spending,” the thinktank said.

“Consumer spending growth is necessary for an economic recovery in the UK, but a consumer-driven recovery will not be ‘balanced’, let alone one reflecting the required long-term ‘rebalancing’ towards an economy with greater net national saving.”

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza