United Kingdom: the strength of internal factors and oil will favour higher growth in 2015

Summary

Over the last three months, domestic factors underlying the economy’s performance have behaved as expected (more employment, improvement in confidence and borrowing conditions, commitment to an accommodative monetary policy) and have been reinforced by certain external factors, in particular the sharp fall in the oil price, whereas the greater momentum in European economies should provide increased support for net exports than was forecast three months ago. Against this backdrop, the strong growth, the increase in wages and the dispersal of the baseline effect of the fall in oil price on inflation in 2H15 will open the way for a very gradual normalisation of monetary policy from the final quarter onwards, although high levels of uncertainty, especially political, could result in holding back domestic demand and influencing the Bank of England's decisions

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