UK economy to pick up in near term if interest rates kept low
The British Chambers of Commerce (BCC) has upgraded its forecast for the UK’s short term economic prospects, but said interest rates must be kept low to aid recovery.
And it warned the pace of growth may slow sharply when the impact of “tough” government measures kick in.
The business group expects gross domestic product (GDP) to grow by 1.7% this year and by 2.2% in 2011. This compares with earlier predictions of 1.3% and 2.1%.
Figures on Friday suggested UK GDP grew 1.2% in the second quarter of 2010.
This figure, from the Office for National Statistics, was greater than initially thought and was boosted by a strong performance by the construction sector.
It represented the fastest rate of quarterly expansion recorded since the first three months of 2001, but most economists do not expect this level of growth to continue.
Later this year the government spending review will outline some of the cutbacks it intends to make as it tries to reduce the budget deficit.
The BCC predicted that “the coalition’s austerity programme and worsening global background are likely to dampen Britain’s medium-term prospects”, saying economic growth would slow to 1.8% in 2012.
Derailing risk
“If successful, the forceful deficit-cutting strategy announced in the emergency budget would put the UK on a path of sustainable and affordable recovery, and could help create a leaner and fitter economy,” said BCC chief economist David Kern.
August 31, 2010
Tags: falling interest rates, Interest Rates, UK loans rates, uk recession Posted in: Uncategorized
One Response
Interest Rates » Loans Calculators » UK economy to pick up in near term if interest … - August 31, 2010
[...] Read the rest of this great post here [...]
Leave a Reply