Interest rates may need to rise sooner than expected to offset the impact of the UK’s overheating housing market as the economy’s growth accelerates, business leaders have said
London house prices have risen 25pc on their 2008 high, fueling speculation of a bubble. While housing transactions are currently running at 30pc below their 2006 peak and, nationwide, prices remain around 2pc down on 2006, the market is picking up pace. Property prices are set to increase by 8.2pc this year and 5.1pc in 2015.
According to the Confederation of British Industry (CBI), this could force the Bank of England to raise interest rates in the first three months of next year, before the general election, as opposed to the third quarter previously forecast. This has been echoed by economists, who claim that Bank governor Mark Carney will confirm interest rises on Wednesday, when the bank lifts its growth forecasts as part of its scheduled inflation report.
The CBI upgraded its GDP predictions from 2.6pc to 3pc for 2014 in its growth forecast, released today. Next year, the economy will expand by 2.7pc, rather than the 2.5pc previously forecast, it added.
According to the Confederation of British Industry (CBI), this could force the Bank of England to raise interest rates in the first three months of next year, before the general election, as opposed to the third quarter previously forecast. This has been echoed by economists, who claim that Bank governor Mark Carney will confirm interest rises on Wednesday, when the bank lifts its growth forecasts as part of its scheduled inflation report.
The CBI upgraded its GDP predictions from 2.6pc to 3pc for 2014 in its growth forecast, released today. Next year, the economy will expand by 2.7pc, rather than the 2.5pc previously forecast, it added.
http://www.telegraph.co.uk/finance/economics/10823094/Earlier-rate-rise-may-be-needed-warns-CBI.html
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