Spring Could See Rise In Interest Rates

Interest rates could rise this spring, says one of the region’s top financial advisers.

Antony Barton, IFA at Robertson Baxter, believes that signs resulting from discussions at the World Economic Forum in Davos in January point towards a rise in interests thanks to stronger than expected growth of the UK economy.

“A rate rise is expected in May following an expansion of the UK economy of 0.5% in the final quarter of 2017,” said Antony. “Forecasts are now predicting that the interest rate would increase from 0.50% to 0.75%, the second increase in a 12 month period.”

Speaking in Davos Mark Carney, the Governor of the Bank of England, advised that rate rises will depend on Brexit negotiations as, despite the growth spurt in the final quarter of 2017, the UK economy is lagging behind Europe and the US.

There is a strong belief that the Brexit vote has wiped 1% off the UK economy and although the pound has rebounded strongly reaching its highest level against the Dollar since the Brexit vote at $1.41, against the Euro it is still €1.15.

“While interest rate looks expected to rise in Spring, there is still a chance that Brexit negotiations and a stronger sterling could lessen the impact of this,” added Antony.

“A stronger sterling could weigh on UK manufacturing, but global growth should provide an offset to this for investors.”

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