UK 'to grow faster' than other major economies

Spiv_2

Britain will turn in stronger growth than any other major economy next year, Goldman Sachs has declared, predicting a significantly stronger-than-expected recovery in the coming years.

The investment bank said that the pound's 25pc depreciation over the course of the crisis would help boost exports, and broader economic growth, and turn the economy around. The forecast flies the face of the conventional wisdom, which has it that the UK will suffer a protracted, sluggish recovery, and could slide back into a slump.
However, it has also emerged that a key bellwether for economic growth, the Organisation for Economic Co-operation and Development's leading indicator, is now at its highest level since 1972, pointing towards a strong recovery.

In its key annual investment conference, Jim O'Neill, chief economist at Goldman, said that he expects the UK economy to expand by 3.4pc next year, compared with 2.4pc growth in the US and just 1.9pc in the eurozone. Although Goldman had always been more optimistic than most other banks about the UK's prospects, the fact that it expects Britain to achieve even stronger growth than the US comes as a surprise.
The rebound is largely thanks to sterling's sharp fall, which Goldman expects to increase demand for British exports, and to boost inward investment from overseas. However, it is also basing the forecast on hopes that the financial sector will recover enough to finance a surge in companies' investment spending, which tumbled to the lowest level last year since the 1930s.
There are worries, though, that the pound's depreciation may be stolen back off the UK in the coming months, with sterling rising against other major currencies as Britain's prospects for recovery become clearer. The pound rose to a four-month high against the euro, and hit a two-month peak in its trade-weighted level, amid speculation that today's inflation data will be higher than expected, and as UBS advised clients to buy sterling against the euro.
The forecast will underline expectations that the Bank of England will soon be forced to increase interest rates from their current low rate of 0.5pc. Ben Broadbent, UK economist at Goldman, thinks this will happen towards the end of the year, but the Bank will come under further pressure to consider an increase tomorrow, with Consumer Price Index inflation set to rise well above its 2pc target.
However, Goldman thinks that US interest rates will remain at their current effective-zero rate all the way until 2012 – far longer than most other institutions. In further evidence of the potential strength of Britain's recovery, economists pointed towards the OECD's leading indicator. At a level of 105.7, it is at the highest point since 1972, something which may point towards a sharp rebound from recession.

http://www.telegraph.co.uk/finance/economics/7021071/UK-to-grow-faster-than-other-major-economies.html

Good old Jim, always has faith in Britain. Unlike some I could mention. Sorry for ruining your day Generali:cool:

doire_2

No doubt some other economist will come out tomorrow and say the UK is still in a right !!!!!!! mess

http://forums.moneysavingexpert.com/showthread.html?t=2212557

Generali

Spiv wrote: »

http://www.telegraph.co.uk/finance/economics/7021071/UK-to-grow-faster-than-other-major-economies.html

Good old Jim, always has faith in Britain. Unlike some I could mention. Sorry for ruining your day Generali:cool:

It doesn't ruin my day at all! There's a difference between being dubious about an economy's prospects and wishing ill on people.

kennyboy66_2

"At a level of 105.7, it is at the highest point since 1972, something which may point towards a sharp rebound from recession."

The decade from 1972 to 1982 hardly has me wetting myself with anticipation.

Generali

kennyboy66 wrote: »

"At a level of 105.7, it is at the highest point since 1972, something which may point towards a sharp rebound from recession."

The decade from 1972 to 1982 hardly has me wetting myself with anticipation.

In fact wasn't it in 1973 that it all went <polite mode>Lady's Chest</polite mode> up?

agent_orange_2

doire wrote: »

No doubt some other economist will come out tomorrow and say the UK is still in a right !!!!!!! mess

You'll not have to wait until tomorrow, stick around here

HAMISH_MCTAVISH

agent_orange wrote: »

You'll not have to wait until tomorrow, stick around here

Yes, but do "armchair economists" count?

Rochdale_Pioneers

I thought the consensus was that Darling is an idiot? He said the crash would be the worst since the 30s and was mocked. He said Britain would recover with strong growth and was mocked. Well he got the first bit right. And if he gets the second bit right I'm sure Boy George will be more than happy to take the credit.

StevieJ

I personally have been very impressed with Darling (I bet he got some stick at school ) and yes the Sterling depreciation may just turn into a magic wand, let us hope it doesn't swing the other way just yet.

ManAtHome

Rochdale_Pioneers wrote: »

I thought the consensus was that Darling is an idiot? He said the crash would be the worst since the 30s and was mocked.

Possibly because he only said it a couple of months ago - certainly didn't mention it in last years (March?) budget.!

Really2

StevieJ wrote: »

Sterling depreciation may just turn into a magic wand, let us hope it doesn't swing the other way just yet.

Would that be a wizards-sleeve. (don't google it)