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UK’s Growth is Looking Good!

Hopes at The British Chambers Commerce have been raised for three years of growth. According to forecasts from the industry body, the UK will grow 0.9% in 2013, 1.9% in 2014 and should hit 2.9% in 2015.

This has gone up as initially the growth forecasts were 0.6% for 2013, 1.7% for 2014 and 2.2% for 2015.

The chief economist at the BCC, David Kern said he couldn’t remember when each year in three got upgrades in forecast. 

This may even mean that the (ONS) Office for National Statistics could review the prediction of a “double dip” slump in June when the growth figures will be released. The last UK slump which was two successive quarters of adverse growth which amounted to each quarter contracting 0.1% each.

The improvement that the forecast had shown was down to official economic data being revised for the last year, finding that the services sector was stronger and that there has been a pick-up in customer expenditure as price increases has been easing up compared to the 5%+ peak that we saw in 2011.

Unfortunately the Eurozone economy has predicted a shrink in 2013, this will be a contraction for the second year running if the prediction is correct.

Regarding the Monetary policy, David Kern said that although the Bank of England QE (Quantitative Easing) plan has supported the financial services industry it was not clear as to how the programme had benefitted the actual wider economy. The quantitative easing was no longer needed as well as the £375billion programme that is currently in place.

Instead the government could really focus on encouraging the economy with investments and infrastructure.  Mr Kern argued that this wouldn’t affect the economic mandate of removing the built in shortfall.

David Kern recapped what the BCC have been calling for extra support for exports especially for services where the UK has trade surplus, instead of goods as there is a deficit.


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