The Economic Growth of the United Kingdom Inches Up to Strengthen the Case For a Series of Planned Increases on Interest Rate

Economists said that the UK economy improved by 0.5% in the three months to October, ahead of the official 0.4% expansion that was recorded in the third quarter.

The National Institute of Economic and Social Research (Niesr) said that the newest figures mean that the final quarter GDP growth is “closely tracking” the 0.5% cent expansion projections.

“We expect the pattern of demand in the UK economy to rebalance towards international trade in response to strengthening global growth and weaker sterling and away from domestic demand,” stated Amit Kara, the head of macroeconomic forecasting of Niesr.

Last month, official figures from the Office for National Statistics (ONS) revealed that the economy of Britain had expanded by 0.4% in the three months to the end of September.

While the flash figures imply a further expansion in the final months of this year, Kara said that this was against a backdrop of a “time when growth in other OECD countries has strengthened.”

Kara said that the rate of growth and elevated inflation of Britain mean that it would not be long before the Bank of England will be looking towards an additional 0.25% increase in interest rates.

Kara continued: “There is a case for the Bank of England to gradually raise the policy rate to stop the economy from overheating. Consistent with that view, our latest forecast for the UK is conditioned on a 25 basis points increase in Bank Rate every six months such that the policy rate reaches two percent in 2021.”

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