UK economy to spring by 2.5% this year, says NIESR

Consumer spending is expected to keep driving UK growth this year

The UK economy will grow by 2.5% this year and 2.1% in 2015, the National Institute of Social and Economic Research (NIESR) has forecast.

The think tank said the UK’s economic recovery had become “entrenched”.

Last year, the Bank of England said it would consider raising interest rates from their current historic lows if the unemployment rate fell below the 7% threshold, though it has since played down expectations of rate rises in the near future.

NIESR’s forecast follows similar raised UK growth forecasts from the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), which are also increasingly optimistic about the UK’s economic prospects.

‘Remarkable performance’

Falling unemployment and rising house prices have helped to encourage consumers to spend more, fuelling the recovery.

More sluggish sectors of the economy such as construction are also now showing signs of strengthening.

But concerns remain – particularly levels of business investment, which remain low, and stagnant wage growth which means prices are continuing to rise faster than many people’s salaries.

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