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UK Economic Outlook: 2013 and Beyond

Economic predictions for UK businesses are looking brighter than expected after surprise growth in the third quarter – whether or not it was the Olympics that skewed figures in favour of a 1% growth, it is now official that the UK is out of recession. Economists at the CBI are now saying that this figure signals that the economy has begun to show signs of picking up earlier than expected.

Economists commented: “In part, this out-performance was due to larger contributions from the Olympics than forecast, but more importantly seems also to reflect stronger than expected underlying momentum.” Now, the CBI is expecting the economy to remain flat overall for 2012 rather than shrinking, and is then predicted to grow by 1.4% in 2013. They also gave the first growth predictions for 2014 at 2% growth, with household spending and trade and investment all looking likely to make a stronger contribution to economic performance.

However, the CBI have warned that this might be the start of a ‘new normal’ – that is, growth, but steady growth. Economists have emphasised that in the light of recession, 2% growth in 2014 is a good trajectory for the UK economy. Though the eurozone crisis is hanging heavily in the minds of politicians and businesses alike, economists believe the zone will be held together. UK interest rates are predicted to start rising in the second half of 2014 as growth will hopefully start picking up and inflation decreases to around the 2% mark.

However, there is still a long way to go. There are worries that areas outside of London need to start growing and contributing more strongly to the economy. The Chancellor’s autumn statement will need to look at infrastructure as well due to recent limited spending in this area.

So, how is your small business doing? Has your company grown or are you still struggling? There’s definitely a long way to go until full recovery, that’s for sure.

 

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