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Rapid expansion of the labour supply and robust business investment means that potential output is likely to have grown strongly last year. Therefore, based upon the latest data for GDP, we estimate that the output gap only narrowed very slightly in 2014, ending the year at 4% of potential output., The prospects for potential output growth are favourable, with the labour supply set to be boosted by sustained strength in inward migration and the staged increase in the State Pension Age, and robust growth in business investment continuing to deepen the capital stock., This will provide the conditions for relatively strong growth and low inflation over the medium term, with GDP growth expected to average 2.6% a year from 2015-19. This is some way below the average of the decade prior to the financial crisis, but it would represent a clear step up on the average growth rate achieved between 2007-14., Our estimate of the output gap is much larger than that of the OBR. This suggests that the UK's structural deficit is smaller and that the degree to which fiscal policy needs to be tightened may not be as great as the OBR estimates. [ABSTRACT FROM AUTHOR]

The article presents a long-term growth outlook for Great Britain. It states that there was a potential output growth due to several factors such as net inflows of migrants, a decrease in the non-accelerating inflation rate of unemployment (NAIRU), and shift to high value-added sectors. It notes the existence of a link between demand shifts and NAIRU changes via hysteresis, profile changes in age affecting a potential output growth, and growth from capital stock expansion.

Presents forecasts on the economic recovery and growth in Great Britain through 2006. Performance of gross national product in the third quarter of 2003; Comparison of growth in the U.S. and in Britain in the 1990s; Level of demand for exports in continental Europe.

Sterling has now appreciated by over 25% since the second half of 1996. A key issue affecting the UK economy is the extent to which this will reduce growth this year and in 1999. When can we expect to see the net trade position deteriorate and to what extent? In this article, Paul Robson and James Nixon argue that business survey evidence implies that the current strength of Sterling is likely to lead to falling manufacturing exports over the course of this year. This combined with increased import penetration should be sufficient to cool the economy and remove the need for a further interest rate rise. [ABSTRACT FROM AUTHOR]