The research body said it had revised its forecast, published three months ago, by 0.4 percentage points.
“We forecast GDP growth of 2.9% this year. This means that GDP will exceed its previous peak in 2008 in the next few months, although per capita GDP still remains well below its previous peak, and will not exceed it before 2017.”
For 2015 through to 2017, the GDP forecast has similarly been boosted, with expectations of about 2.4% growth rate.
However, the institute warned that, despite a return of GDP growth, productivity performance has remained weak. Since 2008, the UK’s productivity has lagged behind its Eurozone peers, on par with that of Italy. In the short run this is likely to have consequences as any robust economic growth will quickly see its spare capacity absorbed. In the medium to long run, ultimately productively is the main – if not the only – driver of overall prosperity.
“The UK’s trade performance remains disappointing, with the current account deficit running at about 4% of GDP, on average, over the period 2012–14, although improving subsequently as the global economy continues to strengthen,” the research said.
Additionally, considerable uncertainty surrounds monetary policy, such as the path of interest rate rises and where market expectations remain for a rate rise in early 2015.
