Britain’s tentative economic recovery is expected to gather pace next year, although growth could moderate in coming years as UK government spending cuts “start to bite”.
The Centre for Economics & Business Research (CEBR) forecast today that the economy will grow by 1 per cent this year – up from its previous prediction of 0.7 per cent – before accelerating to 1.5 per cent in 2014 as a recovery in the housing market supports an increase in consumer spending.
However, the think-tank’s senior economist, Scott Corfe, said growth could dip to 1.3 per cent in 2016 because of the government’s decision to delay cuts in public spending. He added: “It’s not until 2016 that spending cuts really start to bite, so we should expect some slowdown after the next general election.”
The CBI is also predicting growth of 1 per cent this year, while the British Chambers of Commerce recently upgraded its growth forecast from 0.6 per cent to 0.9 per cent.
Chancellor George Osborne said the government’s austerity policies had been vindicated by figures last week, which showed the economy grew 0.6 per cent during the second quarter, up from 0.3 per cent for the first three months of the year.
He said: “Britain’s holding its nerve, we’re sticking to our plan, the economy’s on the mend.”
Neil Bentley, deputy director-general of the CBI, claimed the country was on the road to recovery, although there were likely to be “a few bumps ahead”.