"It is really great that next year the UK economy is finally expected to bounce back from the deepest recession in modern times"
- John Longworth from British Chambers of Commerce
The Pound received a fresh boost on Thursday, with the cable climbing above 1.64, after the British Chambers of Commerce (BCC) unveiled its latest growth forecast. The nation's downturn is finally likely to be left behind in 2014, as the economic output will surpasses its pre-crisis peak. GDP peaked in the first three months of 2008, meaning it would take more than six years just to return to the previous levels; however, these forecasts abate fears of a lost decade.
The economy is seen rising at the rate of 1.4% in 2013, up from a 1.3% expansion expected earlier. This level is likely to take economic output above the pre-crisis level in the second half of the next year. The BCC also posted an updated forecast for 2014, revising it up to 2.7% from 2.2%. Nevertheless, the economy could loose some pace in 2015, and post a 2.4% growth, 0.1% lower than the previous estimate. A year earlier the BCC predicted the pre-recession peak to be reached only in 2016.
Britain is benefitting from low interest rates, improved demand and government schemes, which are all contributing to a short-term amelioration. Long-term challenges, however, are still looming, and policymakers will have to find ways of boosting investment and exports as sooner or later household spending will begin to dwindle.
© Dukascopy Bank SA