The National Institute of Economic and Social Research (Niesr) said today that despite the moderation, which is on the low side of recent figures, growth remains close to the economy’s long-run potential rate.
Official figures put growth in the three months ending June at 0.7 per cent. If Niesr’s estimate proves accurate, it would put the UK’s three-month-on-three-month growth roughly on par with that of the Eurozone, which has seen an acceleration in growth this year.
Over 2015 as a whole it believes the economy will expand by 2.5 per cent. Niesr economists expect worker productivity, which has been unusually flat during the recovery, to pick as demand rises further.
While many economists are forecasting a slight slowdown in growth over summer, the outlook is generally bright. Low inflation due to a collapse in oil and commodity prices is set to boost the spending power of pay packets. Meanwhile, the employment rate is still near record highs despite coming off the boil recently.