- George Osborne, Chancellor of the Exchequer
The UK economy is predicted to remain resilient this year supported by "twin engine" of increased household spending and strong investment growth, according to the Confederation of British Industry, which forecasts an interest rate hike in early 2016. The CBI upgraded its growth outlook for the British economy. The business lobbying organisation now expects the UK economy to expand 2.6% this year up from 2.4% predicted in June. The CBI also improved its forecast for 2016, estimating GDP growth of 2.8%, up from 2.5%. Quarterly growth is anticipated to increase at an average pace of 0.7% through to the end of 2016. Signs of improving productivity in the beginning of 2015 that are feeding through to higher wage growth are part of a combination of factors that led to the revision. Declining commodity prices are also giving a boost to household spending, with business investment likely to remain healthy, the CBI said.
However, there are international headwinds. China's economic slowdown will hinder global growth, while a strengthening Sterling will undermine UK export competitiveness. Chancellor of the Exchequer George Osborne also supported this view by saying that the British economy is vulnerable to international stocks, underlining growing concerns among investors and policy makers as a sell-off in China's stock market spreads worldwide.
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