In the latest of a series of positive reports about the UK’s economic recovery, the Institute of Chartered Accountants in England and Wales (ICAEW) has upgraded its latest growth forecast to its highest level since before the financial crisis.
According to the accountancy body, overall growth will be double that of last year’s 1.7 per cent, rising to 3.4 per cent from its previous forecast of 3.3 per cent. Meanwhile, it says that business investment will grow by 8.2 per cent, up from its previous forecast of 7.1 per cent.
The updated forecast stems largely from record levels of business confidence, the sharp fall in unemployment and generally good news from every business sector, which is helping to allay fears that the recovery is wholly based on consumer spending.
Having just seen official figures reporting that unemployment is now down to 6.6 per cent, its lowest level since January 2009, the ICAEW is forecasting that it will fall further, to 6.4 per cent this year, and predicts that the private sector will create some 450,000 jobs over the next 12 months.
The organisation also believes that the average employee will see a £90 increase in their real gross annual income, although this will still be nearly £2,000 below 2007 levels. In fact the lack of real wages growth has been the only negative economic news of late.
The ICAEW’s upgrade echoes the optimism of the National Institute of Economic and Social Responsibility (NIESR), which said earlier this week that the level of UK gross domestic product (GDP) has just passed an historic milestone, being 0.2 per cent above where it was in January 2008.
In addition, the Office for National Statistics (ONS) also released positive data this week, particularly that manufacturing has risen at its fastest rate in three years in the year to April 2014.
