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UK economy to return to growth

UK economy to return to growth but next year

Conditions in the UK economy could be set to improve slightly over the next year, new estimates suggest.

According to the National Institute of Economic and Social Research (NIESR), gross domestic product (GDP) in Britain will go up by 1.1 per cent in 2013.

This could potentially encourage investors around the world to consider transferring money to the country in the near future, particularly as it is not part of the beleaguered eurozone.

However, the UK's recovery from the recent double-dip recession looks set to be a long process. Indeed, estimates from NIESR indicate that the country's annual growth rate will not pass the two per cent mark until 2015.

The organisation believes this is partly because Britain will be affected by economic headwinds originating from other regions, including the eurozone and the US.

This coincides with new forecasts from the CBI, which is also expecting to see modest improvements in the UK economy over the next few years.

A new report from the organisation has stated that GDP will increase by 1.4 per cent in 2013 – slightly higher than the NIESR's prediction.

However, director general of the CBI John Cridland agreed that the ongoing financial uncertainty in the eurozone will continue to pose a risk to economic growth in Britain.

Furthermore, he said risks to inflation are likely to affect confidence in the UK over the coming years.

Mr Cridland noted that the country's economic performance during the third quarter of the year – when GDP went up by one per cent – had been better than expected.

Nevertheless, the CBI is expecting zero per cent growth throughout 2012 as a whole, as the economy has "bumped along the bottom this year".

"While we expect underlying momentum to pick up modestly next year and to be slightly stronger in 2014, the pace will remain relatively lacklustre," he commented.

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