The UK economy is set to grow faster in 2014 than any other G7 economy, according to a new report from accountancy firm EY.
In its new Item Club report, EY predicts UK GDP to grow by 3.1% this year due to strong business investment, while interest rates won’t rise until the first quarter of 2015 due to low wage increases.
The UK figure was raised this year from 2.9% due to business investment increasing by 12.5%, surpassing the 2% GDP growth predicted for Canada and 1.8% forecast in Germany
“The UK has hit the sweet spot,” Peter Spencer, chief economic adviser to the EY Item Club said the UK has hit what he described as a “sweet spot.”
“Investment is being ramped up, generating over half of the growth over the last year, and helping to rebalance the economy away from consumption,” he said.
“Underpinned by a strong labour market that provides the best of both worlds.”
The Item Club also forecast interest rates will not rise this year from a record low of 0.5% due to wages rising by just 0.7%, going against market consensus which supports a rise for later this year.