UK GDP projected to grow by 0.4% in 2023, 0.3% in 2024: NIESR

There are, in fact, even chances that GDP growth will contract by the end of this year and a roughly 60 per cent risk of a recession at the end of 2024, NIESR said on its website.

“We forecast inflation to remain continually above target until 2025. More specifically we expect it to fall to 5.2 per cent by the end of 2023 and to 3.9 per cent by the end of 2024, as the effects of the rises in bank rate over the past year start to take effect,” NIESR said.

“Nevertheless, with core inflation at 6.9 per cent, and other underlying inflation measures remaining high, we see significant risks to our inflation forecast, which could result in inflation being higher than anticipated,” it noted.

Low economic growth and stagnant productivity is increasing the financial vulnerability of households in the bottom half of the income distribution and the incidence of destitution at the poorest end, the institute observed.

Its projections for 2024 suggest that inequalities of income and assets will grow, with little real income growth for many, low or no savings, higher debt, as well as elevated housing, energy and food costs.

As a consequence, the shortfall in the real disposable incomes of households in the bottom half of the income distribution is set to reach some 17 per cent between 2019 and 2024, it said.

Real wages in many UK regions are expecting to be below pre-pandemic levels by the end of 2024.

The institute expects the number of people available for work to continue to grow with the unemployment rate reaching 4.7 per cent in 2024 and peaking at 5.1 per cent, its ‘natural rate’, by 2026.

Fibre2Fashion News Desk (DS)