UK expected to grow 3pc next year, putting it on “level pegging” with America for the title of the strongest-growing advanced economy in the world
Advanced economies will get their “mojo” back in 2014 as the UK retains its crown as the fastest-growing major European economy next year, according to analysts.
PwC, one of the world’s “Big Four” audit firms, said Britain’s brighter growth prospects could also put it in line to be the fastest-growing economy in the G7.
Richard Boxshall, an economist at PwC, said the UK, which is expected to grow by up to 3pc next year, would be “level pegging” with America for the title of the strongest-growing advanced economy in the world. “It’s too close to call,” he said.
Advanced economies such as America, Japan and Britain are expected to contribute about 40pc to global GDP growth for the first time since 2010 next year, up from levels closer to 30pc between 2011 and 2013. Improving consumer confidence will feed through to higher business investment among advanced economies, PwC will say in its annual predictions this week.
“It’s been quite a long, slow recovery from the crisis, and for the first time in what feels like an awfully long time — about five years or so — low-growth advanced economies are really starting to pick up, and that it is increasingly self-sustaining,” said Mr Boxshall. “It’s coming through private sector growth, rather than relying too much on government fiscal support.”
On a more downbeat note, PwC believes real wages in the UK will decline for the sixth consecutive year, although it expects the gap between prices and earnings to be the smallest since 2009.
Falls in inflation will not continue, according to PwC, amid price hikes by the “Big Six” energy firms. “A lot of pressures will come through from energy and food prices, which will push up the basket,” said Mr Boxshall. PwC expects consumer prices inflation to remain above target at 2.3pc next year.
Data last week showed the UK economy was on course to grow by 1.9pc in 2013, after a rise in consumer spending that saw the Office for National Statistics revise up growth estimates for three of the last four quarters.