By Jonathan Cable
LONDON (Reuters) - The economy will expand at a faster clip in the second half of this year than previously thought but the Bank of England is still unlikely to shift interest rates until at least October, a Reuters poll shows.
Median forecasts from the poll, taken Feb 4-9, show analysts see the economy growing by between 0.4 and 0.6 percent each quarter well into 2011 -- a touch faster at the end of this year than predicted in last month's poll as the recovery gathers steam.
"At the moment, we are in a situation where things can only get better. Things have got so bad that you are bound to see some stabilisation or turnaround," said Simon Hayes at Barclays Capital.
"This year we have a significant boost coming from the stock cycle coming around. Stock building has undershot, consumption has undershot and business investment has undershot as well."
Preliminary figures released last month showed the country barely escaped from its worst downturn since the Second World War in the last three months of 2009, growing 0.1 percent, having contracted for 18 months.
Medians showed economists expect fourth-quarter GDP growth to be revised up to 0.2 percent and, although a few say it could be revised to as much as 0.6 percent, most are far less optimistic.
Britain's goods trade deficit widened to its highest in nearly a year in December, data released earlier on Tuesday showed, disappointing those who hoped that sterling's sharp fall over the last 18 months would have provided more of a net boost to net exports.
The economy was seen contracting 4.8 percent last year, more than the 4.7 percent predicted last month, and is seen growing 1.1 percent this year and 2.3 percent next, compared to growth of 1.2 and 2.1 percent respectively seen in last month's poll.
Chancellor Alistair Darling said last month he was sticking with his forecast that the economy would grow by between 1 and 1.5 percent this year.
HOLD ON, HOLD ON
The Bank has slashed interest rates to near-zero and has so far said it will spend 200 billion pounds on its quantitative easing programme of buying government bonds in an effort to boost the economy.
Economists gave a one in four chance the programme would be extended beyond the 200 billion pounds already allocated. In a poll taken late last month only five of 60 economists saw the programme being extended.
"The Bank has probably reached the end of the road on QE, but there is still some chance it could later decide to extend it if there were major adverse financial shocks," said John Hawksworth at PricewaterhouseCoopers.
The central bank is due to publish its quarterly inflation report on Wednesday and most economists say it will almost certainly revise down its growth forecasts while ramping up its inflation profile.
In its last report the Bank predicted growth would pick up to 3.75 percent by the end of 2011 and inflation would be below its 2 percent target at around 1.6 percent in two years' time but was likely to rise sharply above target in the near term.
Inflation accelerated at a record place in December, with prices rising by an annual 2.9 percent, although that was largely due to an unflattering comparison with a year earlier.
Inflation is seen averaging 2.5 percent this year and then dropping to 1.7 percent in 2011, slightly higher than in the January poll.
The poll does not see rates shifting from their record low until October at the earliest, in line with a poll taken January 28, when they would rise to 1.0 percent. They were then seen rising to 1.5 percent in the first quarter of 2011 and to 1.75 percent by June.
(Polling by Bangalore Polling Unit; Editing by Susan Fenton)
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