UK economy looking better-balanced

The National Accounts published at the end of last year left the economy looking better-balanced than before. The balance of payments deficit should have recorded the smallest deficit last year since 1998, while the household saving rate rose above its long-run average in Q3. (See Chart.) What’s more, the latest data are consistent with the economy growing again by the end of 2009. But there are a number of clouds on the horizon, including a fiscal squeeze, possible relapse in the labour market and renewed house price falls. We still expect GDP growth of just 1% in 2010.