UK Economic Growth Forecast Up

UK Economic Growth Forecast Up.

The British Chambers of Commerce (BCC) has revised up its expectations of economic growth for this year and next. The business lobby group now expects the economy to grow 3.2% in 2014, rather than the previously forecast of 3.1%.

However, weaker UK exports could have a long term effect on the UK economy. The Bank of England also revised up its predictions for UK growth earlier this month from 3.4% to 3.5%.

The BCC said that as a result of strong employment figures they were also increasing their prediction for growth next year to 2.8% from 2.7%. But yet again UK exports are predicted to not perform well as hoped, with forecasts being decreased from 1.9% to 0.8%.

The downgrade in export expectations are a result of the Office for National Statistics reporting a downgrade in its export figures for 2013, as well as the sector under performing in the second quarter of 2014.

Comment

We still feel the economy is on a knife edge.  Ukraine's problems are still unresolved.  Even this week the Ukraine has accused Russia of a masked invasion.  Calls have been made for the US and Europe to increase sanctions.  What does that mean for Europe and the UK (and indeed Russia).  Retaliation and then economic slowdown for all.

In addition, immigration into the UK is up, meaning that it may keep pay down as more people are available to work and perhaps at a lower cost.  Good for employers, not so good for people that spend their money in the Uk economy rather than potentially sending some of it back home to help family.

We see the economy and markets remaining volatile for some time yet.