UK economic growth to exceed 2015 predictions

Combination of increased wages and lower oil prices could help economy grow by as much as 2.7%

Despite slowing in the final quarter of 2014, the UK economy will grow at an even faster rate than had previously been expected, according the Confederation of British Industry (CBI).

The CBI had previously predicted 2.5% growth, but thanks to low oil prices and a pick-up in real wages the economy could expand by 2.7%.

Economists have estimated that pay packages climbed above the rate of inflation in the final quarter of last year, at 2% higher than the same period in 2013 – meaning people have more disposable income to spend. Meanwhile, inflation is predicted to have fallen to a rate of just 0.3% on the consumer price index for January. Other figures have shown Britain’s job market has improved in spite of continuing global economic concerns.

However, the CBI has warned that despite signs of recent strong recovery, economic factors in the world at large may make 2015 a difficult year.

Howard Archer of IHS Global Insight said: “We expect claimant count unemployment to have fallen by 27,500 in January after a drop of 29,700 in December to stand at 840,200. This would be the lowest level since June 2008.”

CBI’s head of economics Rain Newton-Smith commented: “Sterling’s recent high against the euro also adds to the challenges for manufacturing securing further export orders.”

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