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