BlogLatest NewsRapid UK growth on course to continue

Rapid UK growth on course to continue

Britain's rapid growth rate will become "ingrained" and more balanced, the European Commission said on Monday, as two separate reports suggested the strong rate of expansion was likely to continue.

The EC now expects the UK economy to grow by 2.7pc in 2014, compared with a forecast of 2.5pc three months ago. It also upgraded its forecast for 2015 growth to 2.5pc, from a previous estimate of 2.4pc. "Growth is expected to become firmly established... and its composition is expected to broaden," the EC said in its spring forecast on Monday.

The upgrade means Britain has cemented its position as one of the fastest growing economies in Europe – above Germany, which the Commission believes will grow by 1.8pc this year, and France, which is predicted to grow by just 1pc. Only Sweden – which is forecast to grow by 2.8pc this year – is predicted to expand at a faster pace among the advanced economies.   

The strong rate of expansion has put Britain on course to be the fastest growing country in the G7 this year, according to the International Monetary Fund (IMF). PwC, the accountancy firm, also lifted its forecasts for the UK economy yesterday. It now believes Britain will expand by 2.8pc this year, up from a forecast of 2.6pc last month. This puts its growth rate above America, Germany, Japan and Australia.

The EC's forecasts came as a survey by the Institute of Chartered Accountants in England and Wales (ICAEW) showed UK business confidence for the second quarter touched a record high, with respondents expecting almost half a million new private sector jobs to be created in the next 12 months.

"The recovery is becoming more solid," said Michael Izza, chief executive of ICAEW. "Employment growth is accelerating and salary growth is now keeping pace with inflation."

The balance of business confidence in the second quarter rose to 37.3pc, according to the ICAEW/Grant Thornton business confidence monitor, slightly up from 37.2pc in the first three months of the year.

Respondents expect 450,000 private sector jobs to be created over the next year, with small and medium enterprises leading the expansion.

However, the ICAEW warned that skills shortages in some sectors were becoming a “major issue”. it said shortages were most marked in the construction sector, which powers around 6pc of the economy.

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