The UK economy is more than halfway towards a full recovery, according to Bank of England governor Mark Carney.
He said Britain is “more than halfway towards the finish line” and said he would not risk losing momentum.
Better than expected growth for two consecutive quarters has seen expectation levels rise, with growth of 3.5% now expected for 2014.
Mr Carney added that the “expansion is proceeding” and that “momentum is more assured”, leading to upgraded forecasts for the UK’s gross domestic product.
Growth forecasts have been raised for this year and next
Growth of 3% is now predicted for 2015, suggesting that the Bank is satisfied with the current situation although the UK’s pay growth forecast was cut drastically.
Policy makers halved the forecast for 2014 from 2.5% to a below-inflation 1.25% after official figures showed annual pay fell by 0.2% in the three months to June.
This represents the first decline that was recorded since the height of the financial crisis in 2009 and was worse than what the Bank was said to be expecting.
For many people across the UK this showcases a worrying situation of trying to ensure that all bills and living costs can be paid for.
Not waiting longer than is necessary to change
Mr Carney also said he would not wait for pay to catch up with the cost of living before putting interest rates up, highlighting the need for people to budget carefully.
A hike in interest rates is expected to happen in February 2015, as rates will then have stood at 0.5% for nearly six years.
They were previously cut back in 2009 in an effort to aid the economy and the Bank has recognised that they cannot remain at that low rate forever.
Inflation is expected to remain below 2% (the Bank’s target) for the next three years and unemployment continues to fall – both factors seen in a positive light by the Bank ahead of a potential change.
Managing finances as wages fall
Given the fall in wages, the need to manage finances more carefully was highlighted once again and there are plenty of ways of doing this.
Keeping spending in check with a prepaid card is a great way of ensuring you don’t spend more than you would like.
A prepaid card limits spending to the amount on the card at any given moment and is not directly linked to a bank account, making funds safer.
The cards can easily be topped up or replaced if required, while accounts can be checked regularly online if needed.