BoI: UK economy returns to growth trend

According to the latest UK Economic Review, published by Bank of Ireland today, the UK economy looks set to grow at around its trend rate over the past decade following a below-trend advance of 1.9% last year, which was the worst performance since 1992.

The slowdown, which occurred in the first half of 2005, was primarily due to a substantial weakening in consumer spending, with revised figures showing very little real growth in consumption over that period.

The broader economy has subsequently picked up momentum, particularly in the fourth quarter, with strong gains in both investment and exports.

Bank of Ireland chief economist Dr Dan McLoughlin said: “The rise in exports contributed to a 0.7% advance in first-quarter GDP, an upward revision from the original estimate, following a similar rise in the final quarter of 2005.

“The UK economy is therefore now seen to have had strong momentum entering the year, which has prompted us to revise up our growth forecast to 2.7% from the previous 2.2%.”