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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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