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News - 7 February 2014

National Institute of Social and Economic Research says UK economy to grow

National Institute of Social and Economic Research (NIESR) has forecast that the UK economy will grow by 2.5% this year and 2.1% in 2015, they also predict that the unemployment rate will fall below 7% before the end of the year.

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“The estimates are broadly in line with those of other forecasters, including the UK's Office for Budget Responsibility, and the jobless figures released last month showed that the unemployment rate fell to 7.1% in the three months to November.”

Last year, the Bank of England said it would consider raising interest rates from their current historic lows if the unemployment rate fell below the 7% threshold, though it has since played down expectations of rate rises in the near future.

NIESR's forecast follows similar raised UK growth forecasts from the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), which are also increasingly optimistic about the UK's economic prospects.

But concerns remain - particularly levels of business investment, which remain low, and stagnant wage growth which means prices are continuing to rise faster than many people's salaries.

The Bank of England opted to keep its benchmark interest rate unchanged at 0.5% again this month. The rate has been at the historic low since March 2009.

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