UK Recovery Could Signal End to Low Rates

U.K. growth weakened in March to an 8-month low, according to research by the Confederation of British Industry (CBI), but the outlook for the next quarter was positive, with the service sector expected to drive growth.

The CBI’s latest survey, which offers an early insight into the pace of economic growth, found that the U.K. economy was continuing “to bed down” in the first quarter of 2014.

New figures released by the Office of National Statistics on Thursday showed British retail sales rose 1.7 percent last month compared, bouncing back from a 2 percent fall in January.

Consumers are leading the recovery as prices continue to fall. Earlier this week the ONS revealed that U.K. inflation sunk to its lowest level in more than 4 years in February, dipping further below the Bank of England’s 2 percent target.

“As this year progresses, we expect further increases in business and consumer confidence, supportive monetary conditions and a broadening recovery to feed through to business investment and the labor market in particular, with productivity and earnings expected to start recovering,” the CBI report stated.

But former Bank of England Monetary Policy Committee member Andrew Sentance told CNBC that central banks needed to finally end their stimulus measures.

via CNBC

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