Speaking at the NACFB annual conference today Dr Neil Blake, director of economic analysis at Oxford Economics, said the base rate would stay on hold for the rest of this year and “may well stay at 0.5% for the next year as well”.
He said growth would be sluggish for the next 12 to 18 months, hitting just 1.5% this year as government spending cuts stall the slow recovery.
He said: “We are medium-term optimists but believe UK GDP growth will be 1.5% in 2011, maybe less, and will be driven by exports. After that it will get better.
“We think rising interest rates are not going to be as big a threat as many think they are as the UK doesn’t have an underlying inflation problem. A year from now we may well have inflation of 1.5% to 2%.”
Currently CPI inflation is 4.5% - 2.5% over the Bank of England’s target.
He added that SME investment was “vital to the future of the UK” and said brokers had an opportunity to help facilitate that investment.
