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Strong UK economy growth figures expected


The latest UK economic figures are expected to show the highest level of growth in almost four years. The figures also mark the fifth consecutive period of economic growth – something that hasn’t been achieved since the start of the financial crisis in 2007.

The encouraging figures are expected to show gross domestic product (GDP) grew by 0.9% over the last three months in comparison to 0.7% in the previous three months. This has led to increased optimism about the UK economic recovery.

Additionally, the International Monetary Fund (IMF) now expects the UK economy to grow a total of 2.9% in 2014. These predictions would make the UK the best performing out of the worlds largest economies.

Economic growth to encourage interest rates to increase?

As a result of these positive figures, coupled with unemployment dropping below the 7%, there is speculation that the Bank of England could act to increase interest rates from its benchmark low of 0.5%.

The Bank of England stated in August that they would consider increasing interest rates if unemployment dropped below 7%.

Other positive figures have also been released recently which could reaffirm any decision to increase interest rates. These included figures released by the Office for National Statistics (ONS) showing that weekly earnings have caught up with the rate of inflation and that retail sales figures have exhibited a 4.2% year-on-year increase.

However, the National Institute of Economic and Social Research (NIESR) does not expect a change to monetary policy until mid 2015, citing the recovery is “still in its infancy” and warned that a “sizeable negative output gap remains”.

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