UK Economy Back On Track

By TraderVox.com

Tradervox (Dublin) – George Osborne, the Chancellor of Exchequer, is expected to give some hope for the sterling pound this week when he announces an expansion of Growth Domestic Product by 0.3 percent for the opening three months of this year. In his budget statement, Osborne is expected to indicate that Britain is in a better position to avoid recession which is expected to high Europe later in the year. In fact, RBA Governor has indicated that Europe has been in a recession for sometime now, warning that caution should be taken.

This statement will be a relief for the BoE governor who has been under attack following his quantitative easing program. According to some economists, UK’s GDP is expected to have grown by 0.3 percent in three months since January, after shrinking by 0.2 percent in the fourth quarter of 2011. It is forecasted that the economy will grow by 0.8 this year if this trend continues.

Analysts are quite contented with the developments in Euro area hence they are predicting a gradual growth in the UK economy. The statement by the Chancellor of the Exchequer will come barely a week after Fitch warned the UK of losing its credit status if the situation does not improve. Fitch had indicated that the UK economy was in a better position for now but lacked scope to deal with any economic shocks from the euro region. This therefore indicates that the UK economy is much reliant on the successful debt crisis solution in euro region.

Despite the positive prospects of the UK economic growth, the unemployment is expected to rise to 1.75 million people in 2012. Last weeks data showed that joblessness in the country increased to 1.61 percent. This weakness in the labor market is expected to have negative effect on the economic growth in the country.

Further, Osborne’s statement is expected to show an improved budget deficit lowering the public-sector borrowing from Office for Budget Responsibility’s estimate of 127 billion pounds to 125 billion pounds for the fiscal year ending this month.

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