UK: GDP output expanded by 0.5% in the three months to October - NIESR

"Our monthly estimates of GDP suggest that output expanded by 0.5 per cent in the three months to October, slightly stronger than the official outturn for the third quarter of 2017 which was 0.4 per cent," the National Institue of Economic and Social Research of the UK announced on Friday.

Key takeaways

Although economic growth is likely to be stronger in the second half of this year compared with the first, it is important to note that activity has slowed since last year.

We expect the pattern of demand in the UK economy to rebalance towards international trade in response to strengthening global growth and weaker sterling and away from domestic demand. 

If the economy continues to expand at this pace and inflation remains elevated, there is a case for the Bank of England to gradually raise the policy rate to stop the economy from overheating.

Consistent with that view, our latest forecast for the UK is conditioned on a 25 basis points increase in Bank Rate every six months such that the policy rate reaches 2 per cent in 2021.