30/07/2007 13:48
The UK economy is expected to expand faster than expected this year, according to an economic think tank today, although it said growth will slow in the following two years.
National Institute for Economic and Social Research has upped its forecasts for growth to 2.8% for 2007, more than the 2.7% predicted at its last quarterly review.
Things are set to slow down thereafter, easing to 2.6% in 2008 and 2.4% a year later as UK interest rate hikes feed through.
“One more quarter-point rise in the base rate, taking it to 6% later this year, should ensure that inflation is around the target over the medium term,” said the report.
The central bank has lifted borrowing costs five times since August last year, with economists expecting another increase by the end of 2007.
Inflation dropped to its lowest level in eight months in June, according to official figures unveiled last week, but the fall was not as much as had been predicted.
The report from the Office for National Statistics had consumer prices up 2.4% last month from a year earlier, lower than the 2.5% seen in May, but economists had pencilled in a read of 2.3%.
National Institute for Economic and Social Research has upped its forecasts for growth to 2.8% for 2007, more than the 2.7% predicted at its last quarterly review.
Things are set to slow down thereafter, easing to 2.6% in 2008 and 2.4% a year later as UK interest rate hikes feed through.
“One more quarter-point rise in the base rate, taking it to 6% later this year, should ensure that inflation is around the target over the medium term,” said the report.
The central bank has lifted borrowing costs five times since August last year, with economists expecting another increase by the end of 2007.
Inflation dropped to its lowest level in eight months in June, according to official figures unveiled last week, but the fall was not as much as had been predicted.
The report from the Office for National Statistics had consumer prices up 2.4% last month from a year earlier, lower than the 2.5% seen in May, but economists had pencilled in a read of 2.3%.
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