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EY Item Club: Low inflation will help boost UK growth in 2015
Guest Author:
Laura DewThe UK economy is set to grow 2.8 per cent this year, helped by CPI at zero and a lower oil price, according to the EY Item Club.
It is forecasting growth of 2.8 per cent for 2015, although this is a slight downward revision from an earlier forecast of 2.9 per cent, due to weak GDP growth in the fourth quarter of 2014.
UK CPI inflation has fallen to zero in recent months and is expected to average 0.1 per cent this year, making it unlikely interest rates will rise from 0.5 per cent this year. Low inflation combined with an improvement in employment numbers is lifting consumer confidence, the report said.
The EY Item Club identified headwinds for the economy including a weak government and an EU referendum, but the organisation said the UK is prepared for further problems in Greece.
Regarding the general election, the Item Club said the benefits of commodity and export markets will outweigh any political uncertainty and that politics has had only a “limited impact” on markets so far.
Growth in 2016 is expected to be 3 per cent, up from previous estimates of 2.9 per cent
