The UK economy is predicted to grow by 2.8% this year, driven mainly by consumer spending and investments, according to a new forecast from the National Institute of Economic and Social Research (NIESR).
The NIESR adds that after rising in 2005 by 1.4%, the slowest pace since 1992, personal consumption increased by 1.9% in 2006 and will pick up further momentum this year, rising by 2.6%.
The recovery in investment is forecast to continue, as capital spending grows in 2007 by almost 6% for the second year running.
Economic growth will slow to 2.4% in 2008 as the boost from investment and personal consumption tapers away.
| Summary Of The Forecast – UK Economy |
| |
Probabilities (a) |
| |
Inflation Target Met (b) |
Output Falling (c) |
Real Gross National Income (d) |
Real GDP (d) |
Manufacturing Output (d) |
Unemployment(e) |
CPI (f) |
RPIX (g) |
External Current Balance (h) |
PSNB (i) |
| 2006 |
n/a |
n/a |
2.4 |
2.7 |
1.2 |
5.6 |
2.7 |
3.5 |
-37.4 |
38.3 |
| 2007 |
77 |
0 |
3.1 |
2.8 |
3.4 |
5.8 |
2.2 |
2.8 |
-42.4 |
37.2 |
| 2008 |
75 |
3 |
2.2 |
2.4 |
2.8 |
5.9 |
2.1 |
2.6 |
-40.2 |
35.5 |
| (a) In percentage terms (b) Inflation between 1% and 3% per annum at the end of the year (c) A fall annual output (d) Percentage change, year on year (e) ILO definition, fourth quarter rate (f) Consumer prices index, percentage change, fourth quarter on fourth quarter (g) Retail price Index, excluding mortgages, percentage change, fourth quarter on fourth quarter (h) Year, £ billion (i) Public sector net borrowing, fiscal year, £ billion. |
The latest Ernst & Young Independent Treasury Economic Model (ITEM) Club Winter forecast for the UK economy predicted slightly higher GDP growth of 2.9% in 2007 (see UK Economy Predicted To Grow 2.9% In 2007).
Globally, the NIESR predicts that the world economy will grow by 5.0% in 2007 and by 4.8% in 2008 (see Global Economy To Expand Vigorously).
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