Recovery to weather referendum uncertainty well

Although the EU referendum is less than three months away, its impact on the economy has so far been relatively modest. And if the UK votes to stay, activity could subsequently rebound. Admittedly, GDP growth is still unlikely to better last year’s 2.3% rate, in part because of the renewed fiscal squeeze. But we expect stronger growth next year. Interest rates will probably rise sooner than financial markets expect, but are unlikely to end 2017 higher than 1.25%.