Since 2013, the financial press has been abound with predictions for what 2015 will have in store for the British economy, how much growth we’ll experience and if we can hope for some consistent prosperity.
Growth Predicted
Back in the summer of 2013, the Guardian quoted “one of the City’s most pessimistic forecasters”, Capital Economics, who have predicted growth of 2.5% this year, and even more growth in 2016. Unemployment is also predicted to stay fairly static throughout the year, rather than decreasing. Accounting firm, BDO, are particularly confident in Britain’s business potential in 2015, but have warned that over-confidence would be misguided. “While it’s encouraging to see…we should be mindful of the zigzag trend that has characterised UK business confidence since 2008”, said BDO partner Peter Hemington.
A similar outlook on 2015 was reported by The Week much more recently in November 2014, though from more of a business perspective than consumer. Industries like “manufacturing, energy and construction” are leading the charge. The Week also pointed to Britain’s tech enterprises, and the growth of London’s very own ‘Silicon Valley’, which “offers a range of great new opportunities for entrepreneurs”.
Interest Rates
The Bank of England’s Monetary Policy Committee (MPC), who are set to increase interest rates in autumn this year, “is committed to ensuring that normality continues to mean low, stable and predictable inflation.” Interest rates will increase “as the expansion progresses” and is likely to be in 0.25% increments. The MPC are divided, however, on the topic of the labour market. Chris Beauchamp, an analyst at IG, is quoted as saying that “UK unemployment was looking better…but the slump in earnings sends another signal that the stars have not yet aligned for a hike in interest rates.” There is general concern that this rise will make mortgage repayments a struggle for many homeowners across Britain, especially as wages are not projected to rise accordingly, which many are indicating to be the reason the MPC haven’t officially announced a date for the hike yet.
Savers and investors should be aware of the incremental rise and how it might not affect them as positively as they’d think, according to the Telegraph. Banks and building societies may only allow the first increase, but any more is doubtful to affect savings.
What the experts say
The Financial Times collated the thoughts and opinions of various financial heavyweights at the beginning of January this year, asking them the question ‘Will Britain’s economy sustain a decent pace of economic growth in 2015?” Those in the adamant ‘yes’ camp include representatives from IHS Global Insight, LSE, and the University of Liverpool, all predicting growth of between 2 and 3%.
There were some, however, who think the economy’s growth will be comparably slow after 2014. Charles Davis from the Centre for Economics and Business Research commented on the “external environment” and the challenges it poses; “a pretty much flat lining Eurozone; recession in Japan; major geopolitical uncertainties and the slowdown in China.”
It’s a mixed picture, though many seem optimistic about what 2015 will bring, including former MPC members, economists and research institutions.