The Bank of England has substantially increased its forecast for GDP growth in the UK over the next three years.Before last June's referendum on EU membership, Mark Carney, the bank's governor, controversially suggested that a vote to leave could result in recession.Now, after healthy growth over the final two quarters of 2016, the bank forecasts in its latest inflation report that GDP will rise two per cent over 2017, 1.6 per cent the next year and 1.7 per cent in 2019. In its report last November, the bank was looking at 1.4 per cent growth this year.Minutes of the latest Monetary Policy Committee showed members voted unanimously to keep interest rates on hold at 0.25 per cent, despite the opinion of some that rates will need to increase in the not-too-distant future. There were also warnings of a possible slowdown in consumer spending a result of higher prices caused by the fall in the value of sterling and weak wage growth.Inflation was forecast to reach 2.8 per cent in the first half of next year, before reducing to 2.4 per cent in 2019.

Predicted Brexit-related economic Armageddon has not materialised

Neil Wilson, a senior market analyst at ETX Capital, commented: "Despite the upgrade to growth, the market sees this as a bit doveish as inflation is not expected to run away as much as thought and we are seeing sterling hand back earlier gains."He said the latest upgrade in GDP growth represented "a touch of humble pie for the bank, as it's been made abundantly clear that the economic Armageddon it expected in the event of Brexit has just not materialised".Mr Wilson added: "The UK remains the fastest growing G7 economy - not bad for a nation that some think has committed an act of self-mutilation in choosing to leave the EU."

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Confederation of British Industry predicts further rises in consumer price inflation

Coinciding with the bank's latest forecast was publication of the Confederation of British Industry's (CBI) latest SME Trends Survey, which showed small and medium-sized manufacturers recorded new orders growing at the fastest pace in two years.Alpesh Paleja, principal economist at the CBI, commented: “Activity among SME manufacturers is ticking along nicely, with new orders growth reaching a two-year high. The pick-up was largely shouldered by domestic demand with exports yet to see any material boost from the weakness in sterling.“But the lower pound is clearly stoking cost pressures, which in turn is pushing up factory gate prices. This will eventually feed through to prices at the till, so further rises in consumer price inflation are on the cards.“Against this backdrop, smaller manufacturers will welcome the government’s Industrial Strategy green paper, which recognises the importance of driving productivity growth across all sectors of the UK.”Also launched on Thursday was a new group comprising UK business leaders intent on developing plans to increase productivity and create new skilled jobs through digital technology.

UK to be positioned at the heart of a new global technology/industrial revolution

Juergen Maier, chief executive of Siemens who is chairing the group, said: "Our review is about defining how the UK can best adopt radical new technologies that will boost productivity and create new high tech jobs across manufacturing and industry."We want the end result to be a sector deal for manufacturing that makes a real difference to companies regardless of their size or market."It is not yet too late for the UK to take the global lead in this space, but we are in danger of falling behind if we do not take up the challenge now - so our aim is position UK manufacturing and industry at the heart of a new global industrial revolution much like it was over 170 years ago when we first started doing business here."Industry Minister Nick Hurd said: "Industry is best placed to identify what firms really need and we want them to come to us with proposals to transform and upgrade their sector."The independent Industrial Digitalisation Review will set out how the UK can maximise the use of digital technology to increase productivity, and create the high-skilled jobs we need for a successful, modern economy."In the Winter 2016/17 issue of Relocate magazine, David Sapsted looks at some of the key international locations bidding for a piece of the post-Brexit action, and canvasses the views of business leaders and politicians. 

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