The Bank of England forecasts that growth would be negative for the UK in 2023 and KPMG projected that the UK could fall into a recession next year as inflation bites. Struggling post-Brexit the United Kingdom has a number of difficulties it has to overcome. A recent article by Bloomberg highlights what they are.
Consumers are gloomy
High inflation, disgruntled unions, canceled holiday flights, and surging costs of living mean that Britons are more pessimistic than at any time in at least 50 years. This is the gloomiest UK confidence has been as post-Brexit and COVID realities sink in.
Slowing UK economy
The Office for National Statistics reports that the average rate of annual growth for Britain between 1998 & 2007 was 2.7%. Between 2010 & 2019 it was 2%. Concerningly, the rate of UK growth is set to fall again to an average of 1.8% between 2023 & 2026.
The UK was one of the first central banks to act against inflation by hiking interest rates as it feared a wage-price spiral. However, the Bank Of England sees worse inflation to come as energy prices take another rise higher in October as the energy price cap is raised again. The BoE projects a rate of 11% for the UK.
Drop in investment
Once the UK voted to leave the UK there was a huge drop in investment. The uncertainty that the UK’s vote prompted is at least part of the reason for a significant investment drop off.
So, the road is bumpy for the UK as it seeks to avoid a coming recession. For more details on the reasons for the UK’s struggling economy you can read Bloomberg’s full piece here.