The rain has finally departed (at least for now…) and another raft of sunny economic forecasts is brightening MT’s day. The British Chambers of Commerce and accountants BDO both expect the UK economy to be bigger than the pre-financial crisis peak by the summer. About time really.
The BCC now expects UK GDP, which is still 1.4% below its pre-recession high, to grow 2.8% this year and 2.5% in 2015, above its previous forecasts of 2.7% and 2.4%. Last year, the business group didn’t think the UK would outgrow its first quarter 2008 peak until 2016.
Accountants BDO also predicted the economy would be above the late noughties high by the summer, with partner Peter Hemington noting there was ‘markedly strong optimism and hiring intentions across all sectors of the economy’.
However, there could still be dark clouds on the horizon. The BCC thinks youth unemployment will still be a whopping 17.8% in 2016, compared to 19.9% of 16 to 24 year-olds out of work in the last quarter of 2013 and close to three times the adult average.
‘It’s not time to break out the champagne glasses just yet,’ BCC director-general John Longworth said. ‘Crucially, Britain is simply not investing enough.’
The business group predicts investment will grow 6.6% this year after a 1.2% fall last year, but it would need to rocket almost 15% to match 2008’s level (investment was very high in the first half of that year, before Lehman Brothers fell off a cliff).
Expect George Osborne to conveniently ignore the still-low investment levels in next week’s Budget…