The UK Economy’s Recovery from Covid-19 Expected by End of Next Year, But Faces Challenges
- ‘Stuttering growth’ expected due to ongoing pressure from high interest rates
- Bank of England has hiked interest rates for 14th time since 2021
A report warns today that the UK economy will not fully recover from the Covid-19 pandemic until the end of next year.
Britain is projected to experience ‘stuttering growth’ over the next two years, primarily due to ongoing pressure from high interest rates and increased unemployment.
According to the National Institute of Economic and Social Research (Niesr), the economy will grow by 0.4 per cent this year and an additional 0.3 per cent in 2024. This is a downgrade from the think-tank’s previous forecast of 0.6 per cent growth for next year, which it attributes to higher-than-expected borrowing costs impacting households.
Consequently, it will take another year for the economy to regain its pre-Covid-19 levels from early 2020.
The stark message came after the Bank of England last week hiked interest rates for the 14th time in a row since 2021, raising its base rate to 5.25 per cent
The stark message came after the Bank of England increased interest rates for the 14th consecutive time since 2021, raising its base rate to 5.25 per cent.
Professor Stephen Millard, from Niesr, stated: ‘The triple supply shocks of Brexit, Covid, and the Russian invasion of Ukraine, combined with the necessary monetary tightening to reduce inflation, have had a detrimental impact on the UK economy.
‘As a result, we expect slow growth over the next two years, with GDP only reaching its pre-2019 fourth quarter level in the third quarter of 2024.’
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