Britain's economy will grow 2.8 percent next year, accountants Ernst and Young said on Sunday, cutting their previous estimate of 3-percent growth as a spate of interest rate hikes cools consumer spending.
"We may have already passed the peak of the boom," said Peter Spencer, chief economic adviser at Ernst and Young's ITEM club, which uses the same economic forecasting model as the Treasury.
The Bank of England has increased rates five times since November last year to 4.75 percent in a bid to cool consumer spending. A recent run of weak economic data has prompted many experts to predict that the Bank will hold rates steady next month for the third month running.
ITEM said some 0.5 points could be knocked off Britain's growth rate next year if the price of a barrel of oil remains close to $50, but overall, the club said the economy would still remain robust.
"This is a major contrast with the 1970s, when a similar type of shock would have knocked the UK economy for six," said Spencer.
The ITEM club estimates that the oil price, currently at around $49.90, will average $37 a barrel next year and $32 in 2006.
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