— NIESR (@NIESRorg) 2 augustus 2017
Well hello there ‘National Institute for Economic and Social Research’ (NIESR). After we just dealt with the news that experts predicted widespread and damaging effects on Britain if no Brexit deal was reached before 2019, you guys come in and tell us that growth will accelerate right after Britain’s economy bounces back from its current 1.7 percent GDP. According to NIESR, the economy has slowed each year since 2014 and according to their forecast, 2017 will mark the point for GDP growth. They forecast the UK will grow by 1.7 percent this year but will rise to 1.9 percent in 2018, 2 percent in 2019 and 1.8 percent in both 2020 and 2021.
Amit Kara, Head of UK macroeconomics research at NIESR, said:
“Consumer spending is no longer the engine of growth for the UK (…) what is picking up is the contribution of exports, which is in large part because of our more optimistic view on the global economy including the Eurozone, and also because of investment.”
Niesr also anticipates a rise in worldwide GDP of 3.6 percent, higher than the expected 3.3 percent, and as a result, central banks should be stimulated to begin to restore normal interest rates. In Britain, the Bank of England then should “withdraw some of that stimulus in six or eight months’ time, if the economy evolves as we forecast, which is with further strengthening in growth,” according to Kara.
But it’s unlikely the Bank of England will pursue this course, because “even a small rate hike could have repercussions for the economy in its current fragile state. Until there is more clarity about the Brexit deal, the Bank of England will probably abstain from adding to that fragility by hiking rates. We expect the first step in November 2019,” according to economist Christian Schulz at Citi, merely days before the NIESR report.
But NIESR isn’t the only one predicting Britain’s growth numbers for the upcoming years, the IMF for instance, also gave it a go, and they expect UK growth in 2018 to fall to 1.5 percent. Also, the Bank of England will unveil its own updated GDP forecasts in its Inflation Report on Thursday.
In conclusion, only time will tell which institution truly hired the real experts on this matter.