UK economy to expand further

The UK economy is expected to expand further, mainly driven by domestic demand, especially private consumption, which is stimulated by a combination of low interest rates, very high consumer confidence, increasing house prices, high employment and positive real wage growth.

"Investments are also expected to pick up as the slack in the labour market has diminished significantly although it is uncertain to what degree investments will be affected by the in/out EU referendum", says Danske Bank. 

UK exports have been weak due to a combination of the strong GBP and weak growth in Europe. If growth picks up in Europe, this would increase foreign demand for UK goods and services and according to Bank of England calculations more than offset the negative impact of the strong GBP. 

"The fiscal consolidation will also pull growth down but less than previously expected", added Danske Bank.