12th December 2013
UK economic growth is set to break through its pre-recession peak in 2014 according to a major UK business trade body.
The British Chambers of Commerce (BCC) has upgraded its previous prediction that the UK economy would expand from 1.3% to 1.4% for 2013 and from 2.2% to 2.7% for 2014, taking GDP above its 2008 pre-recession peak, in the second half of 2014.
However the group has slightly reduced its 2015 forecast from 2.5% to 2.4%. Household consumption, which accounts for two-thirds of UK GDP, is expected to be the main driver of growth in 2013 and 2014, aided by the strong housing market.
But it forecasts that economic progress will slow marginally in 2015 as household consumption moderates due to high personal debt levels. It also anticipates that the MPC’s 7% unemployment rate threshold will be reached sometime between July and the end of September in 2015, some three months earlier than previously forecast.
David Kern, BCC chief economist, says: “We expect GDP growth to remain strong in the short-term, as the housing market continues to boost household consumption. But while it was necessary to rely on the consumer and on housing in the early part of the recovery, it must now become more balanced, particularly towards exports, as household consumption will slow.
“We believe that in 2014 UK GDP will at long last move above its 2008 pre-recession level. But long term trends show we can do much better, and with the right policies in place we can expect a much stronger recovery in the second half of the decade.”