According to the National Institute of Economic and Social Research, over the last few months UK economic growth has quickened and it is expected that the UK economy will finish the year stronger than expected.
Their estimate was that the UK’s GDP has grown by 0.5% in the last three months, while their earlier prediction was at 0.4%.
In the aftermath of the Brexit vote, it’s been a slow year economically for Britain. As a result of the UK’s decision, the European Commission in Brussels have forecast a lag in the UK economy trailing the EU’s growth.
Amit Kara, head of UK macroeconomic forecasting at the National Institute of Economic and Social Research said: “Although economic growth is likely to be stronger in the second half of this year compared with the first, it is important to note that activity has slowed since last year and this at a time when growth in other OECD countries has strengthened.”
“If, as we expect, the economy continues to expand at this pace and inflation remains elevated, there is a case for the Bank of England to gradually raise the policy rate to stop the economy from overheating. Our latest forecast for the UK is conditioned on a 25 basis points increase in bank rate every six months such that the policy rate reaches 2 per cent in 2021.”
This is not the first time that the UK economy has been given a more optimistic projection by the National Institute of Economic and Social Research, who have previously anticipated an economic boom for the UK. Comparatively, much of the research around the UK economy has been very gloomy since the Brexit vote.
The estimation is timely given that we’re coming into the festive period, and will likely provide some relief to traders and retailers.
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