Despite the global slowdown the UK will avoid recession, unlike the US, Japan and Germany.
So says a quarterly report from the National Institute of Economic and Social Research, which has reviewed the British economy’s strength in the light of revisions to official data and now forecasts economic expansion of 2.3% this year and 2.1% in 2002.
“The government is fortuitously administering a major fiscal injection into the economy,” commented the think-tank’s director Martin Weale. “A budgetary loosening that was initially planned for 2000-1 is taking place in 2001-2; one that was initially criticised as pro-cyclical is turning out to be counter-cyclical.”
Consumer confidence remains buoyant, reported the Institute, adding that there is no need to lower interest rates further than the current 4.5% to ensure growth, with inflation coming down over the next two years.
News source: Financial Times