Commenting on the Office for National Statistics’ preliminary estimate of UK Gross Domestic Product which showed an increase of 0.7% in the fourth quarter of last year, taking the growth rate for the year as a whole to 1.9%, KPMG Chief Economist Andrew Smith, said:
“With four consecutive quarters of expansion under our belts, this is looking more and more like a normal recovery. Although quarter-on-quarter growth slowed marginally at year-end, the economy is entering 2014 with considerable momentum and forecasts of 3% - plus growth this year – regarded as outliers only a few months ago – no longer look outlandish.
“Surging consumer confidence and rising spending indicate households are already feeling better off. And with any luck the feel good factor will be supported by an easing of the squeeze on real wages over the course of this year. While this may not yet be the holy grail of export- and investment-led growth, the recovery has to start somewhere. And stronger consumption and rising employment are creating a virtuous circle - which should in turn encourage businesses to invest and sustain the upturn.
“But whilst the outlook this year is the brightest since before the financial crisis, longer-term sustainability is not completely assured. Europe, the UK’s biggest export market, remains depressed, emerging market jitters could turn into something worse and, of course, policy makers could slip up. But, for now, the Governor of the Bank of England seems determined to avoid a premature tightening of monetary policy – and, with an election in 2015, fiscal policy looks unlikely to be tightened further.”
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Margot Cowhig, KPMG Corporate Communications
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.