Wage rises to drive UK growth in new year

RISING wages and a boost to building could drive up growth in Britain next year, a top economist has said.

Simon Ward of Janus Henderson Investors said the economy is likely to expand at a similar rate to the 1.8pc it is thought to have achieved this year.

He looked at share prices and growth in money circulating compared to a year ago. When money growth and share prices both rise, it suggests a country is headed for a boom.

When both fall, it suggests growth will be sluggish. This year, Ward said, UK-focused stocks are up 5.9pc while money growth fell.

The economist said this suggests solid but not outstanding performance in 2018, similar to this year. And he believes the average prediction of 1.6pc growth could be too low.

Ward said: ‘Reasons for modest optimism include a prospective easing of the squeeze on real incomes; recent orders suggesting a recovery in construction; and an expected Brexit transition agreement.’

It came as the pro-Remain CBI said Brexit uncertainty hit growth. Boss Carolyn Fairbairn has demanded an agreement on a transition deal by April.