UK Economy Set to Avoid Recession, But Interest Rates to Have Impact
Britain’s economy is projected to grow more rapidly than previously anticipated this year, but it is expected to face challenges in 2024 due to the delayed impact of interest rate hikes, according to a new forecast.
The report from EY ITEM Club predicts that the UK economy will experience 0.4% growth in 2023, an increase from its previous estimate of only 0.2% growth in April.
However, the forecast for the next few years has dimmed. The report expects the economy to grow by only 0.8% in 2024, down from the previous forecast of 1.9%, and by 1.7% in 2025, down from 2.3%.
Meanwhile, inflation is expected to persist, resulting in annual wage growth surpassing annual average inflation only in 2025 instead of the previously projected 2024. As a result, real wages are likely to continue falling until then.
Hard times: Britain’s economy is to grow more quickly than previously thought this year – but will find it hard to pick up speed in 2024
This means that many voters may not experience an improvement in their finances until after the upcoming General Election.
Hywel Ball, of EY, stated, “The economy is moving past the series of shocks which have buffeted it in recent years, but their repercussions are long-lasting and holding back UK growth.”
Last week’s figures, which showed a larger-than-expected decline in inflation in June, provided hope for consumers grappling with the cost of living. It also indicated that interest rates may not need to rise as much as originally feared.
The EY ITEM Club report acknowledges that inflation has proven to be more persistent than anticipated in its previous forecast in April. Consequently, interest rates will remain higher for a longer duration.
On a positive note, the report states, “The economy’s resilience so far this year translates into an upgraded forecast for 2023.” It adds, “The economy remains on course to avoid recession.”
However,
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
