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UK economy to see fastest growth of G7 nations with 3.1% expansion

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By John McCarthy, Opinion Editor

July 21, 2014 | 3 min read

The UK is forecast to have the fastest growth of all the G7 countries with GDP expected to rise by 3.1 per cent in 2014, according to a report from the EY Item club.

Peter Spencer: UK has hit economic sweet spot

The economy, which will be entering a period of expansion after a lengthy recovery, will see the fastest growth in the G7 group, ahead of Canada’s two per cent and Germany’s 1.8 per cent.

The UK economy, which grew by nearly one per cent in the first three months of this year, is set to boom after five quarters of positive growth.

Additionally, companies will show more confidence in future investments, with a 12.5 per cent increase in spend.

Peter Spencer, chief economic advisor to the EY Item Club, said: “What a difference a year makes. Last summer any growth looked better than no growth and the outlook remained uncertain. But, confidence has now returned and economic uncertainty has dropped well down the worry list.

“Business investment is being ramped up generating over half of the growth over the last year and helping to rebalance the economy away from consumption. Underpinned by a strong labour market that provides the best of both worlds - boosting incomes via employment rather than wages, while keeping inflation low – the UK economy has hit the sweet spot.”

There will also be more jobs – causing a predicted fall in unemployment from 6.8 per cent in 2014 to 5.6 per cent at the close of 2015.

The report forecast interest rates to remain at the record low of 0.5 per cent, due to the strength of the pound, the Eurozone’s instability and lagging UK wages - this is despite Mark Carney, governor of the bank of England saying that rates might rise quicker than expected.

This comes after the Advertising Assosciation predicted a six per cent increase in ad revenue for 2014, earlier this month.

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