Bank of England sees economy growing at 3.4pc this year

 
Peter Spence
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The economists at Threadneedle Street have been busy.

We've goth a host of update forecasts from the Bank of England, with the central bank suggesting that the UK economy is now performing strongly.

The BoE sees 3.4 per cent GDP growth in 2014, and 2.9 per cent in 2015. In February, BoE forecasts suggseted that we'd see growth of just 2.7 per cent next year.

Based on the BoE's predictions, growth in productivity of just one per cent this year should bring down unemployment to 5.9 per cent by 2017.

That productivity growth is still limp, and is only expected to recover to its pre-crisis peak at the end of the BoE's forecast period.

Speaking at a press conference, BoE governor Mark Carney suggests that spare capacity, or slack, in the UK economy has narrowed slightly, but will continue to diminish at a slower rate.

Carney stressed the economy has now merely "edged" closer to the point at which interest rates will need to "gradually" rise.

There's been little attention given to a rapid acceleration in UK house prices, especially in London, with the BoE merely acknowledging that price growth is likely to continue.