EY’s Item Club has hiked its predictions for economic growth today. The group now expect an expansion of 1.4 per cent this year, and 2.4 per cent next year. Previously, the Item Club expected 1.1 per cent growth this year and 2.2 per cent in 2014.
The new research suggests that while growth in the short term will be based on rising consumer spending, firms’ confidence will lead to contributions from investment and exports next year.
The forecast is based partly on the effect of rising demand for housing. As a consequence, residential property prices are expected to grow by 3.5 per cent this year, and 6.6 per cent next year, soaring ahead of wages.
Peter Spencer of the Item Club is bullish about the prospects for the government’s Help to Buy scheme, insisting that the chances of another housing bubble are “extremely slim”.