Bank of England: UK economy heading 'back to normal'
The Bank of England has upgraded its growth forecasts for next year, saying the economy 'has started to head back towards normal'. Its latest inflation report predicts growth of 2.9% next year, up from its 2.7% forecast three months ago.
However, it has left its forecast for this year unchanged at 3.4%.
Mark Carney, BoE governor also says the economy had 'edged closer' to the point when interest rates would need to 'gradually rise'. But he reiterated that increases would be gradual and that the rate 'may stay at historically low levels for some time'.
'Securing the recovery is like making it through the qualifying rounds of the World Cup - it's a real achievement, but not the end goal. The prize in the economy is sustained and prolonged growth,' he says.
The BoE has also sharply upgraded its forecasts on unemployment. It now predicts the unemployment rate will fall to 5.9% in two years, compared with its prediction last year that the rate would remain above 7% for some years.
The upgraded forecast followed the latest official jobs data showing the unemployment rate was 6.8% in the three months to March.