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Goldman Sachs predicts bounce for UK economy

Goldman Sachs has predicted the UK economy will bounce back during 2010 and will outstrip most G7 growth by 2011.

The investment bank predicts UK GDP will rocket back into positive figures this year, to 1.9 per cent and will then move up to 3.4 per cent by 2011.

It says growth in the UK will exceed that of Japan, the Eurozone and the USA. Overall, thanks in part to predicted massive growth in China and India, Goldman Sachs says world GDP will rise to 4.4 per cent this year.

Goldman Sachs economist Jim O’Neill says: “Looking at 2010, as we have been since the spring, when we first significantly upgraded our forecasts for 2010 for China, we remain more optimistic than the consensus.

“For 2011, we are even more optimistic, despite having a modest slowdown in China and Brazil. This is due to a modest acceleration in the G7 countries, notably the UK, as well as a notable acceleration in some other important countries, such as India.”

O’Neill says the firm remains bearish with regard to the US, and fears that slow growth may drag the country into another recession. He says: “If the US were to fall back into another recession, with actual declines in GDP, then this would pose a fresh significant risk for the rest of the world.”

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