UK Economy Forecast

Abstract

GDP growth accelerated from 1.6 per cent in the year to the second quarter of 2005 to 2.6 per cent in the year to the second quarter of 2006. At the time of writing the official preliminary estimates suggest economic growth was 0.7 per cent in the third quarter of this year. This is a little stronger than implied by our forecast, which is based on monthly estimates of GDP. But, taking on board the preliminary estimate in our forecast would have only a small effect on the annual growth figure for this year. Looking further forward we expect relatively stable GDP growth at around the economy's trend rate (figure 1). Our central projection is for growth of 2.6 per cent in 2007, 2008 and over the medium term. The outlook for GDP growth is not very different from our previous forecast published in the July Review.