World Economy

UK Growth Facing ‘Rollercoaster of Risks’

UK Growth Facing ‘Rollercoaster of Risks’UK Growth Facing ‘Rollercoaster of Risks’

The prospect of a hike in the cost of borrowing will continue to distract investors this week as the focus shifts to the Bank of England following China’s recent stock market collapse and Friday’s disappointing US jobs data.

The bank’s nine-strong Monetary Policy Committee meets on Wednesday and Thursday but economists are not expecting an immediate rise in interest rates from their historic low of 0.5%. They will however be looking for any fresh signals from governor Mark Carney about when an increase may finally come, Yahoo reported.

Global economic uncertainty has taken its toll on UK manufacturing, according to the latest quarterly research from trade group the EEF.

The report, by law firm DLA Piper, found a ‘rollercoaster of risks’ have resulted from persistent worries about the world economy. Bright spots provided by domestic consumer demand and construction activity have not been enough to hold the shadow of global factors at bay, it said.

“UK manufacturing is having to contend with a rollercoaster of risks from the rest of the world and the white-knuckle ride is starting to take its toll,” said EEF chief economist Lee Hopley.

Consequently the EEF is halving its manufacturing growth forecast for 2015 to just 0.7% after output and orders turned negative and output fell to its lowest level since the fourth quarter of 2009.

Smaller companies are also less confident about their prospects with confidence cooling, according to the Federation of Small Businesses.

It found that while confidence remains in positive territory, small firms are more cautious about their chances of success than in recent quarters.

“Their confidence is crucial to driving the economy and job creation,” said FSB national chairman John Allan.