Charles Stanley has said talk of a UK recession or slow growth have been overstated, with chief global strategist John Redwood saying forecasters need to “cheer up”.
Redwood says that the current estimations for UK growth are too pessimistic, ranging from negative numbers to growth of 0.8 per cent.
Instead, he believes the UK’s growth will be much stronger this year and next year. Ahead of the Brexit vote the Bank of England originally forecast growth of 2 per cent this year and 2.2 per cent next year, with Redwood saying this is “likely to come true”.
“So far since the referendum vote retail sales have moved ahead strongly, car output is well up. We have heard good news from a major housebuilder about increased interest in new homes and seen a more positive CBI survey about output,” he says.
“Above all money and credit was growing well before the latest Bank of England stimulus. It’s time for forecasters to cheer up, and look more closely at the underlying data.”
The latest figures for UK GDP for second quarter this year exceeded expectations, rising by 0.6 per cent ahead of Brexit. However, data from IHS Markit released last month signalled a 0.4 per cent contraction in the economy in Q3, the steepest decline since the financial crisis.
It now predicts the UK economy will slip into mild recession in the remaining quarters of 2016 and will grow at 0.2 per cent in 2017.
In the Budget earlier this year, the Office for Budget Responsibility slashed its forecast for UK GDP growth in 2016 to 2 per cent, a greater than anticipated decline. The cut was down from a 2.4 per cent projection in the Autumn Statement.