RISING consumer spending and a surging housing market have put the UK’s recovery firmly on track, according to a study published earlier this month.
The Ernst & Young Item Club said the UK’s recovery has “finally got legs”, as it almost doubled its forecast for growth this year to 1.1 per cent, up from 0.6 per cent just three months ago.
Government schemes will continue to spur the housing market, it said, but added that consumers will fund higher spending by dipping into their savings, rather than through a big increase in household incomes.
However, Item said a rebalancing of the UK economy remains unlikely this year, with subdued exports and growth driven by consumers.
It expected a long-awaited revival in exports and business investment next year, reflecting a recovery in the United States, pro-growth policies in Europe and a shift towards consumption in China.