NIESR: Prospects for the UK economy
- Assuming a vote to remain in the EU: the UK economy is expected to grow by 2.0 per cent in 2016. Growth will pick up to 2.7 per cent in 2017.
- The Inflation rate is expected to average 0.3 per cent this year and 0.9 per cent next
- We expect the Bank of England to start raising interest rates in November. Rates will then continue rising throughout 2017, ending the year at 1.5 per cent.
Uncertainty surrounding the outcome of the UK’s referendum on leaving the European Union has probably weighed on economic growth in recent months. But assuming a vote to remain in the EU, we expect an uptick in growth in the second half of this year as delayed investment decisions are implemented.
The EU referendum has also led us to push back the point at which we expect the tightening phase of the monetary cycle to begin, to November of this year. Consumer price inflation is forecast to be below the 2 per cent target in the second half of this year and throughout 2017. From then on inflationary pressures should build to a level broadly consistent with the Bank’s target rate in 2018.
The recent depreciation in sterling can be largely attributed to the risk that the UK will vote to leave the EU. Given this, and our forecast assumption that the referendum will result in a vote to remain in the EU, we expect sterling to appreciate sharply in the third quarter, ending this year broadly where it started in 2015.
Latest News from
IEA - Most workers confined to home unable to work productively, report reveals31/03/2020 11:35:00
No more than 15% of healthy workers confined to their homes will work productively, argues new research from the Institute of Economic Affairs.
Covid-19: Emergency support package needed to save ‘children of the pandemic’ from becoming its unseen victims - IPPR31/03/2020 10:35:00
Right to paid parental leave, extra family cash, help accessing online learning and priority use of parks ‘essential’ to protect children from widening poverty, education and health gaps
IEA - Steps to help self-employed “unlikely to be the last” Chancellor has to take27/03/2020 15:15:00
Julian Jessop, Economics Fellow at the Institute of Economic Affairs, commented on Chancellor Rishi Sunak’s plans to support the self-employed during the Covid-19 pandemic
JRF - Government must go further to protect people on low incomes from impact of coronavirus27/03/2020 13:15:00
New JRF briefing briefing urges the Government to go further to protect people on low incomes from the impact of coronavirus.
IPPR - Take a 30 per cent stake in virus-hit airlines, and hold shares in a new UK wealth fund, Chancellor urged26/03/2020 11:35:00
Price of ‘bailing out’ any companies should be equity which will generate long-term returns, say economists in IPPR discussion paper
IEA - Gender pay gap figures “never fit for purpose”26/03/2020 10:35:00
IEA responds to government decision to suspend enforcement of gender pay gap reporting in light of the Covid-19 pandemic
Lift restrictions on migrants’ rights to help limit the spread of Covid-19, says IPPR26/03/2020 09:35:00
New IPPR analysis reveals migrants are more vulnerable to economic and health fallout of the virus outbreak
Civitas - Human rights laws should be decided democratically in Britain – the constitution needs rebalancing24/03/2020 11:35:00
The Human Rights Act should be abolished as Britain seeks to regain the ability to decide its own human rights laws within its own democratic public sphere, a new Civitas publication argues.