MNI: UK Growth Accelerates To 0.5% In 3 Months To Nov: NIESR

By David Robinson

     LONDON (MNI) - UK growth has picked up pace in the fourth quarter,

according to the National Institute of Economic and Social Research (NIESR).

     NIESR estimated that growth was 0.5 per cent in the three months to

November, up from 0.4% in the third quarter and in line with NIESR's forecast

for fourth quarter growth.

     The Bank of England has revised down its estimate of potential trend, or

non-inflationary, growth to around 0.4% a quarter so 0.5% quarterly growth would

squeeze whatever spare capacity remains and add to inflationary pressure.

     "GDP growth at 0.5 per cent is somewhat higher than the economy's speed

limit. If, as we expect, the economy continues to expand around this pace and

inflation remains elevated, there is a case for the Bank of England to gradually

raise the policy rate to stop the economy from overheating," Amit Kara, Head of

UK Macroeconomic Forecasting at NIESR, said.

     NIESR is predicting Bank Rate will rise from its current 0.5% level to

reach 2.0% in 2021.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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