LONDON (Reuters) – A British employers group raised its forecasts for economic growth this year on the back of low oil prices and a separate measure of house prices picked up – a sign that a housing market slowdown could be bottoming out.
The Confederation of British Industry said Britain’s economy now looked set to grow by 2.7 per cent this year, up from a previous forecast of 2.5 per cent made in November.
“The UK is in good shape compared with other economies, with both investment and household spending underpinning economic growth,” CBI economics director Rain Newton-Smith said. “But there are still risks to exports from a shaky eurozone.”
The Bank of England last week kept its forecast for economic growth this year at 2.9 per cent, but raised its forecasts for growth in 2016 and 2017, thanks largely to the boost from lower fuel costs for households and businesses.
The relatively positive outlook could help Prime Minister David Cameron as he prepares for national elections in May.
Also on Monday, property website Rightmove said the average asking price of houses put on the market rose by 2.1 per cent in the four weeks to Feb. 7, picking up speed from a month earlier.
Rightmove linked the rise to a shortage of properties on the market which, based on the average number of properties for sale per estate agency, had never been lower at the start of the year than in the first two months of 2015.
Rightmove director Miles Shipside said a change in British pension rules, which will allow people aged over 55 to cash in their retirement savings from April without paying as much tax, could push up prices further if savers plough their cash into buy-to-let properties.
“Agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in buy-to-let properties,” he said.