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Saunders: The economic outlook
Let me begin by setting out this speech’s three key themes. First, despite the drop in CPI inflation over the last year –and the further decline expected late this year –the output gap is probably closed. Second, the economy is likely to gain support over the next year or two from slightly better global growth and, conditioned on a smooth Brexit, reduced uncertainty. Third, I suspect that (assuming a smooth Brexit) consumer spending will outperform the forecast in the May Inflation Report. This would reinforce the prospect that the economy moves into significant excess demand over the next 2-3 years, and hence ... (full story)