UK economic growth 'to slow' in 2005

A golden decade for the UK economy is set to peter out this year, a senior economist has predicted.

Economic growth is likely to slow in 2005 after 10 years of expansion buoyed by falling unemployment, low inflation and low interest rates, Roger Bootle of business advisers Deloitte said.

Deloitte expects gross domestic product (GDP) growth to slow sharply to about 2% in 2005 from last year’s rate of more than 3%, with only a small lift to 2.2% in 2006.

The Bank of England’s Monetary Policy Committee is likely to bring rates down “aggressively” during the next year or two, Mr Bootle said.

Deloitte expects rates to drop to 4% by the end of this year before returning to their 2003 low of 3.5% in 2006.

Mr Bootle said this would help to cushion the blow of a housing downturn and a weak economy, but added: “The upshot is that, while 2005 may not be the year when things go completely wrong, it is likely to mark the beginning of a more difficult period for the UK economy.”