UBS (Berlin: UBRA.BE - news) upgrades its forecast for the United Kingdom's economic growth to 1.0 percent from 0.7 percent in 2013 because of better-than-expected first quarter data, easier credit conditions and a good start of the current quarter.
The bank expects the economy to grow by 1.2 percent in 2014, against its earlier prediction of 1.1 percent.
"UK policy has been aggressive and innovative, including the 'Help to Buy' and 'Funding for Lending' schemes. This favourable backdrop is starting to be reflected in stock performance and domestic UK stocks have outperformed over the past year," UBS says in a note.
UBS adds Rightmove (LSE: RMV.L - news) to its "UK 1st XI" list saying that the British property website benefits from a UK housing market recovery. Rightmove shares are up 1 percent, outperforming a 0.1 percent gain by FTSE mid cap index.
The bank upgrades the UK banks to "overweight" from "neutral" following its more positive outlook on the economy and sees mortgage lending picking up.
It downgrades the pharmaceutical sector to "neutral" expects the sector to underperform in an economic recovery.
Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net
