The economy of Britain will expand faster in this year as customers use their savings towards spending, as per the report of the Ernst & Young Item Club.
The London based group said that contrary to the April forecast of 0.6 percent, the economy of UK will increase by 1.1 percent in this year. As per the report, the growth will be enhanced to 2.2 percent and also to 2.6 percent in the year 2015. Both of these growth rates are faster that the estimates that were made in the past. The spending of customers will be useful in the revival of global and housing growth of UK economy. The Governor of New Bank of England, Mark Carney, said that the interest rates will be going to remain low for longer duration.
Chief Economic Adviser, Peter Spencer, said that the growth in customers spending had resulted in the growth of transactions in the housing or real estate sector. The savings ratio of the customers has decreased from 6.3 percent to 5.6 percent. The inflation average is also going to decrease from 2.8 percent to 2.2 percent by 2014-15.
According to another report from Rightmove Plc, the values or prices sought towards houses have increased to four percent from two percent of previous year. In next month, Carney is going to instruct the officials to use forward guidance while developing of various policies. In the current scenario, many central banks have new tools such as forward guidance in order to reach the expectations of customers.