city of londonConfidence in the domestic economy is running high in certain precincts within the City of London. According to the National Institute of Economic and Social Research, the UK economy is ‘set to grow faster’ during the next two years, but it is expected to do so without a discernible improvement in the unemployment figures. Their forecast is derived from survey data from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA). Accordingly, 40 percent or more of UK respondents surveyed were more optimistic about the recovery than in the past 5 years. A summary of the UK growth forecast by the International Monetary Fund (IMF) predicts a nearly one percent expansion in the UK as business confidence improves.

Not all of the news coming out of the IMF is so merry. Rising momentum in UK economic indicators is being offset by a chronically lagging job market. Although the general outlook for consumer spending is encouraging, this increase is expected to come at the expense of personal savings which puts the sustainability of the trend into question. Economists who study such things feel that a sustainable improvement in employment can only come about through acceleration in disposable household incomes and not from dipping into savings.

 

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