UK Economy Forecast

Abstract

The economy continues to expand at a robust pace (figure 1). We now expect GDP to rise by 2¾ per cent in 2007 after similar growth in 2006. This is an upward revision to our forecast for economic growth in 2006 and 2007 of approximately ¼ percentage point since October. Underlying these changes to the forecast for 2006 are upward revisions to the data for the first half of last year and stronger than expected growth for the third quarter of last year. The healthy pace of expansion forecast for this year is supported by a further acceleration in domestic demand growth after the weakness observed in 2005. This is led by a pick-up in consumer spending, supported by stronger growth in real disposable incomes and rapid accumulation of household wealth, and the continued strength of investment demand.