While the preliminary estimate of Q4 GDP indicated that the recovery lost pace towards the end of 2014, early 2015 appears to have seen a renewed acceleration. Indeed, monthly indicators of output from the CBI and Markit both picked up in January, while measures of confidence have strengthened. And while the forthcoming general election might lead to a period of political uncertainty that dampens sentiment, we are relatively confident that the recovery will not lose pace. The boost to households’ discretionary spending power from lower oil prices has not fully come through yet, and it will take some time for manufacturers to invest in new forms of production made profitable by lower oil prices. Meanwhile, surveys continue to indicate that pay growth is strengthening, while recent falls in market interest rates suggest that the cost of bank finance is set to fall further. So for now, we still think that GDP is on track to rise by a robust 3% or so this year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services