Beneath the surface, it is clear that the economic recovery has not been firing on all cylinders recently. And the recovery faces a number of headwinds over the next year or so – in particular the re-intensification of the fiscal squeeze and a referendum on the UK’s membership of the European Union. However, we remain optimistic that a rebound in productivity will pave the way for a period of above-average growth beyond 2016, accompanied by only gradual rises in inflation and interest rates.
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