Economy is expected to grow this year

The UK economy is expected to grow by 0.5% this year, according to summary of forecasts collated by the Treasury.

The average (median) figure is slightly below the 0.8% forecast by the Office for Budget Responsibility, supplied to chancellor George Osborne for his Budget speech.

However, there is a wider divergence of views, with a range of a 1.3% contraction up to 1.5% growth, and an average figure of 0.5% growth.

Inflation, under the RPI retail prices measure, is expected to be running at between 0.9% and 3.5% by the fourth quarter of the year and the average forecast is for a 2.5% rise.

By the end of 2012, inflation, using the CPI consumer prices measure, has a range of 1.3% up to 3.0% with a median figure of 2.0%.

The midpoint or median rise for average earnings over the year is 2.2% with a range of a 1.0% rise up to a 4.1% rise. So there is the possibility that living standards may improve — for some — this year.

2011 revisions The UK’s economic growth for the last three months of 2011 has been revised down to a contraction of 0.3% by the Office for National Statistics (ONS) from a contraction of 0.2%.

The ONS blamed the revision on the transport and communications and business services and finance sectors.

The annual figure for 2011 growth has also been revised down to 0.7% from 0.8%.

www.hm-treasury.gov.uk/d/201203forcomp.pdf

http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q4-2011/index.html