UK GDP To Surpass Pre-recession Peak

The UK economy will exceed its pre-recession peak this summer, according to the latest predictions from British businesses, despite warnings that the recovery is on shaky foundations as a booming housing market stokes consumer confidence .

The British Chambers of Commerce had forecast that GDP would overtake its performance in the first quarter of this year in the autumn, but has now brought that forward to the second quarter. Services and manufacturing have been the main drivers of growth according to official data, but the BCC warned that the buoyant outlook concealed long-term challenges.

“We urge the chancellor to use this month’s budget wisely by incentivising businesses to hire young people so that the next generation of workers are not left behind,” said John Longworth, the director general of the BCC, which represents more than 100,000 businesses. According to the BCC, UK GDP – excluding the impact of inflation – will reach £392.8bn in the three months to July, a level not attained since the economy generated £392.7bn at the beginning of 2008.

It now expects GDP to grow 2.8% this year, compared with its forecast of 2.7%. But that is still below the Bank of England’s growth forecast of 3.4% this year. The business group predicted wage growth would overtake inflation in the middle of this year, meaning workers will finally see growth in their real earnings.

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