Item: UK to grow 2.3pc

GROWTH in the UK economy will be 2.3 per cent this year, slightly ahead of independent data from the Office for Budget Responsibility (OBR) last November, which set growth at 2.1 per cent, according to the Item report from accountancy firm Ernst & Young.

Despite the relative optimism, Item said the Bank of England must stand firm on keeping interest rates at their current low despite increasing concerns over inflation.

The quarterly independent treasury economic model report, has concluded a rate increase in the near future would be premature, and risk hampering the recovery in 2011.

Chief economic adviser Peter Spencer, said that inflation and the VAT hike were “temporary pressures” and that “it’s vital that the MPC stands firm” on a lower base rate.

The report pointed towards a positive upwards swing in business investment over 2011, increasing 9.4 per cent this year and up to 13.9 per cent in 2012.