United Kingdom to Experience Slow Economic Growth, Forecast Says

TEMPO.CO, Jakarta - The EY ITEM Club, a non-governmental forecasting group, stated that the gross domestic product (GDP) of the United Kingdom will grow by 2.4 percent in 2015, well below the 3.1 percent expected this year. "This number is below the forecasts by the Bank of England, CBI, and the IMF," EY ITEM stated on Monday, October 20, 2014.

The forecast was announced just days after Chief Economist for the Bank of England Andy Haldan, gave a signal that the interest rates will experience difficulty in increasing until next summer, causing a gloom image of the economic condition in the future.

The political instability, both foreign and domestic, also raises concerns in the business community. The condition was forecasted to hinder and slowdown England's economic growth.

Peter Spencer, EY Item Club's chief economic adviser, said that the forecast for GDP growth is still relatively good. "What has changed is the global risks surrounding the forecast and the headwinds facing investment by firms," he said.

EY ITEM Club said that inflation rates in the UK next year will remain stable at 1.3 percent, which is higher compared the number recorded in the last five years, 1.2 percent. Spencer said that export numbers are gloomy as well. "Manufacturing data shows a low number and it seems that it will be difficult for trade to contribute to the economic growth until 2017," he said.

IMF previously forecasted that UK's economy will grow by 3.5 percent this year before slowing down to 2.7 percent in 2015. CBI also forecasted the same growth percentage. Bank of England however, was more optimistic with a forecast of 3 percent growth in 2015.

BBC | INTERNATIONAL BUSINESS TIMES