n the latest issue of the Deloitte Economic Review, Economic Adviser, Roger Bootle, considers the prospects for the UK economy over the next couple of years. His main points are as follows:
* The UK economy appears to have built up a reasonable head of steam in recent quarters. But at the same time, concerns have grown over the threat of a slowdown in the US economy and the impact of higher UK interest rates. What, then, should we expect for 2007?
* There certainly appears to be scope for the UK economy to grow fairly rapidly over the coming quarters. This partly reflects the apparent existence of some spare capacity after the recent rises in unemployment.
* More importantly, the economy’s potential growth rate may have risen, reflecting faster growth of the workforce. My best guess is that potential growth could be as high as 3.25% per annum over the next couple of years.
* The fact that the economy looks as though it can grow more rapidly now, however, does not mean that it will. One obvious cloud on the horizon is a downturn in the US economy.
See full Press Release.
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