Leading indicator indices on the evolution of the United Kingdom economy suggest a moderate pace of economic growth in the coming months. The Conference Board index, published yesterday, did not move in November, but, from May to November, it increased by 2.4 %, compared to 3.1 % the six preceding months. The OECD equivalent index points towards a stable pace of economic expansion, just over the long term historical trend.
After an important decrease in economic activity in 2009, the UK economy had a moderate growth in 2010, estimated at close to 2.0 %. Prices are actually going up more rapidly than the target established by the Bank of England, which could bring the Bank to increase its base interest rate sooner than what the economic fundamentals would prescribe. Important restrictions to governmental spending will start next April. The combined effect of eventual interest rates increase and of a slower growth of governmental spending could affect downward the economic outlook. For the moment, expected GDP growth in the UK, in 2011, go from 1.2 % to 2.5 %, the average being 1.9 %, according to The Economist poll of forecasters (January 8 edition).
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