Source: The Telegraph
The UK economy will grow faster next year than official predictions suggest, a pair of leading industry bodies have predicted.
The Confederation of British Industry and the National Institute for Economic and Social Research expect GDP to grow by 1.3pc and 1.4pc respectively next year, higher than the current Bank of England estimate.
The forecasts from both group for 2017 reflect positively on the health of the UK compared to the bearish post-Brexit recession forecasts promoted by HM Treasury in advance of the EU referendum.
These predictions match a wider trend among economists, who typically slashed their predictions immediately after the referendum but have gradually increased them in recent months as stronger economic data are published. Independent forecasts compiled each month by the Treasury show economists chopped their predictions for 2017 GDP to 0.5pc in July, but have now raised them back to 1pc.
The National Institute for Economic and Social Research (NIESR) has upgraded its forecast, predicting an expansion of 1.4pc next year – faster than the 1pc it predicted in August, though still a slowdown compared with 2016’s growth rate of an estimated 1.7pc.
The Confederation of British Industry (CBI) expects GDP to grow by 1.3pc in 2017 – slower than its previous pre-referendum forecast of 2pc.
But the estimates are higher than the 0.8pc the Bank is predicting for next year, based on its latest forecasts in August.
As part of its new forecast, the CBI believes business investment will be flat next year and fall in 2018 as companies wait for the outcome of the EU negotiations before investing. To counter that, the business lobby group wants Philip Hammond, the Chancellor, to announce extra public investment in infrastructure in his Autumn Statement later this month.
Meanwhile strong manufacturing numbers have backed up this trend. Factory output fell by 1pc in the three months after the referendum, but a new survey from IHS Markit indicates the sector has grown strongly again in September and October. Its purchasing managers index stood at 54.3 in October, when any figure above 50 indicates output is growing.
That is down a touch from 55.5 in September but still solidly above the long-term average of 51.5.