ECONOMIST VIEWS: WHAT WILL DRIVE THE UK’S ECONOMIC RECOVERY?
SIMON WARD | HENDERSON
“The UK GDP revision confirms a domestic demand-led recovery. Domestic demand was stronger than previously thought in the latest quarter and over the last year, with net exports correspondingly weaker. The demand upgrade was focused on fixed investment.”
MICHAEL SAUNDERS | CITIGROUP
“We expect that this ongoing monetary stimulus [weak pound and low interest rates], plus the improvement in corporate and household balance sheets over recent quarters, will cause the recovery to gradually strengthen, despite headwinds from fiscal tightening and poor credit availability.”
SIMON HAYES | BARCLAYS CAPITAL
“Although we expect households to save a higher fraction of their income in the future than they had prior to the recession, we expect that over the next year, the pressures on household incomes from a weak labour market and fiscal consolidation are likely to cause the saving ratio to drop.”
PHILIP SHAW | INVESTEC
“At the start of this year, activity was highly dependent on public spending, but GDP was probably held back by poor weather and the reaction to the VAT hike. The readjustment of the household balance sheet should enable the private sector to take on a more prominent role in driving the economy.”