Global growth is picking up momentum as the UK economy remains stable, according to an influential group of economists.
The world economy’s output will grow by 3.3 per cent this year, according to the National Institute of Economic and Social Research (Niesr) 0.2 percentage points faster than previously predicted.
The stronger global momentum will continue into 2018, with further acceleration to 3.6 per cent annual growth.
Meanwhile the institute forecasts the UK economy will grow by 1.7 per cent this year, a slight slowdown from 2016, before rebounding to 1.9 per cent growth next year.
Rising inflation will weigh on the UK’s growth, Niesr predicts, with the consumer price index set to grow at an annual rate of 3.4 per cent by the end of the year.
While inflation will be slightly lower than previous forecasts because of a recent partial recovery in the value of sterling, Niesr still expects the British economy to take a hit from rising prices.
Simon Kirby, Niesr head of macroeconomic modelling and forecasting, said: “GDP growth over the next couple of years will be subdued, growing at less than the economy's long-run potential rate of two per cent per annum, but households will feel the pinch from rising consumer price inflation.”
A stronger global growth rate could help to sustain the UK economy, with recoveries gaining pace in the Eurozone, which has seen surveys indicate industry confidence at six-year highs.
Meanwhile larger emerging markets such as Brazil and Russia seem to have also turned around from recession.
However, the world economy is not out of the woods yet, with risks from the US administration under Donald Trump still a significant threat.
Graham Hacche, a Niesr fellow, said: “The new forecast has been constructed at a time of unusual uncertainty. There are significant risks that the gathering momentum of global growth could be derailed by policy mis-steps by major economies including protectionist trade policies and unrealistic budgets or a weakening of private sector confidence.”