British Businesses Confident About UK Economy’s Next Two Years

Strong consumer spending and the performance of the dominant service sector have made Britain’s businesses increasingly confident about their prospects over the next two years, according to the British Chambers of Commerce.

In its quarterly health check of the economy, the BCC said it was upgrading its growth forecast for the next two years amid signs that its members were shrugging off international uncertainty and concerns about the outcome of the general election in May.

The BCC said it was now believed that national output would grow by 2.7% in 2015 and 2.6% in 2016 – up by 0.1 percentage point and 0.2 percentage points respectively. Growth in the first quarter of 2015 is predicted to accelerate from 0.5% to 0.7%.

Consumer spending is likely to be supported by the continuation of the UK’s ultra-low interest rates, which have been at 0.5% for the past six years. The BCC said it did not expect the Bank of England to start pushing up the cost of borrowing until the first quarter of 2016 at the earliest.

John Longworth, the BCC’s director general, welcomed the growth upgrade but warned of the dangers of the economy becoming too dependent on consumer spending.

“We are upgrading our UK growth forecasts for 2015 and 2016 because businesses up and down the country are doing well – despite international and domestic uncertainty,” Longworth said.

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