The UK think tank, the National Institute of Economic and Social Research (NIESR) showed in its latest report on Thursday, there is only about 20% probability of the UK economic growth doubling its pace of expansion, in the face of the country’s chronic run of poor productivity.
Key Findings:
Javid has said he wants to raise the underlying pace of economic growth to around 2.75% a year, a rate last achieved in 2006.
NIESR said such an acceleration would be difficult.
His plans to raise annual public investment by 20 billion pounds ($26 billion) were likely to boost the level of economic output and productivity by just 0.4%, and only after more than a decade.
Arno Hantzsche, Principal Economist at NIESR, noted: “The chancellor’s aim of raising growth towards the post-war average - nearly 3% - is quite unrealistic.”
Meanwhile, NIESR director Jagjit Chadha said: “A hurried fiscal boost we think may be stymied by a lack of current capacity in the economy, or possibly by creating unrealistic short-term expectations about the extent to which that can quickly bring about an acceleration of living standards.”
FX Implications:
Following Wednesday’s volatile trading session, the GBP/USD pair sees quiet Asian trading so far, although the bears remain in control.
At the press time, the cable drops 0.13% to trade near 1.2985 region.
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