The UK economy was surprisingly strong in the second quarter, says Paul Guest, senior European economist at Moody’s Economy.com. Guest forecasts a 2.7-percent reading for UK gross domestic product (GDP) in 2006, ahead of a slowdown to 2.4 percent in 2007. Second-quarter GDP posted a 0.8 percent quarter-over-quarter reading, which marked the most accelerated gain since the end of 2004.
The 2006 GDP forecast would improve upon 2005’s 1.8 percent rate.
On the inflation front, UK CPI inflation rose at a 2.4-percent rate in July, down from 2.5-percent in June.
“The BOE has been focused on inflation,” notes Powell. “They expect it to exceed their target level.”
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