Economic outlook

Confidence about the economy has grown just, according to the latest forecast from around 40 City and institutional forecasts for the economy, collated by the Treasury in September.

The economy, as measured by gross domestic product (GDP), is now expected to grow by between 0.8% and 2.1% this year, and the midpoint (median) estimate is for 1.3% growth. The midpoint figure in August was 1.1%.

The improvement in the economy is expected to carry over to next year — the forecasts range from 1.5% up to 2.7% growth, with a median of 2.1%.

Inflation forecasts for the final quarter of this year, based on the Retail Prices Index (RPI), range from 2.1% up to 3.4%, with a median estimate of 3.0%.

Inflation is expected to stay on the high side. The range of forecasts for next year widens to 2.1% at the bottom end up to 4.1% at the top, and the median is up to 3.1%.

Worker’s living standards are likely to continue to fall this year as average earnings growth forecasts range from 0.6% up to 2.8%, with a median of 1.5%.

For 2014, average earnings are expected to show growth of between 1.3% and 3.8%, with a median forecast of 2.5%.

www.gov.uk/government/uploads/system/uploads/attachment_data/file/243636/201309forecomp.pdf