You are here: Home - Investing -

UK GDP to ‘beat pre-crash levels’ this year

Written by:
The strength of Britain's economy is poised to exceed its pre-crash high in the next few months thanks to 'accelerating' growth, the National Institute of Economic and Social Research has predicted.

The think-tank has revised its GDP growth forecast for 2014 upward to 2.9 per cent, 0.4 percentage points higher than the figure it gave three months ago.

The latest report said the improving growth outlook meant the economy would finally have fully healed from the 2008 recession later this year, having shrunk by 7.2 per cent from peak to trough.

It said: “This means that GDP will exceed its previous peak in 2008 in the next few months.”

Growth of 0.8 per cent in the first three months of the year meant the economy was 0.6 per cent smaller in March than it was at its peak in 2008, according to the Office for National Statistics.

However, NIESR said exceptionally strong growth in April alone could have been enough to push the economy beyond its pre-recession peak.

“We’re incredibly close to the pre-recession peak,” said Jack Meaning, a research fellow at NIESR who spoke to the Telegraph. “So whether we make it in the estimates or not will be a matter of 0.1 percentage points.”

Unemployment is also likely to drop to 6 per cent by 2015, the think-tank said, while inflation will stay close to the 2 per cent target.

On the basis of the government’s plans, NIESR expects a slow decline in net public sector borrowing throughout 2014, which will gather pace in subsequent years. By 2018, it predicts an absolute surplus. The net debt to GDP ratio is expected to peak in 2015-16.

But despite the improvements in GDP, NIESR said UK productivity remains low: “This matters in the short run, since without any improvement in productivity, robust economic growth will see spare capacity absorbed relatively quickly; it matters even more for the medium to long run since ultimately productivity is the main, if not the only, driver of real wages and overall prosperity.”

The UK’s trade performance also remains “disappointing”, the think-tank added.

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

Your rights for refunds if travel is affected by strikes

There have been a wave of strikes this year across many different industries, and more are planned over Christ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week