THE UK economy will not return to its pre-pandemic size until the final quarter of 2024, British Chambers of Commerce forecasts.
British Chambers predicts the UK economy will shrink by 0.3% this year. It forecasts growth in 2024 of 0.6%, which would be very weak expansion by historical standards.
In late January, the Centre for Economics and Business Research highlighted the UK’s significant trailing of France in the context of gross domestic product across 2022 relative to pre-pandemic levels.
READ MORE: Kate Forbes sounds a whole lot like New Labour
The CEBR said then: “GDP in France is estimated to have been 0.7% higher than pre-pandemic levels across 2022, marking the best performance on this measure amongst Western Europe’s five largest economies. For comparison, the UK economy was an estimated 0.4% smaller than its pre-pandemic size across 2022, meaning the gap between France and the UK on this measure stood at 1.1 percentage points. With France expected to see additional growth this year, and the UK set to contract, this divergence will widen further by the end of the year, reaching an estimated 3.0 percentage points.”
British Chambers forecasts the UK will avoid technical recession, defined as two consecutive quarters of contraction.
It said: “The BCC is now expecting the first quarter of 2023 to see GDP fall, before three quarters of flat or weak growth – leading to an overall contraction of 0.3% for the year. This is a slightly more optimistic outlook than either the OBR (Office for Budget Responsibility) or Bank of England’s predictions.”
British Chambers added: “The BCC also expects the economy to grow in 2024, at 0.6%, compared to the BoE’s forecast of 0.25% shrinkage.”
READ MORE: SNP Prestwick Airport backing pays off, with critics quieter
It observed UK exports were “stronger than expected in the second half of 2022” in part because of fuel and machinery demand, and also trade in precious metals, which it noted were likely seen as a “safe harbour” in uncertain times.
READ MORE: Ian McConnell: Banks coin it in on interest rates. Here is what should be done
However, it added: “This trend is not expected to continue, with a 4.5% decline in exports predicted across 2023. BCC research also shows that, while overall export values have held up, many smaller companies are not reporting any improvements in their trading conditions.”
READ MORE: Brexit: Bizarre Tory denials on food shortages amid turnip cherishing
Alex Veitch, director of policy at British Chambers, said: “The stark reality is that businesses face a very difficult year ahead."
He added: “With the Government having little fiscal headroom for the Spring Budget, it is vital it spends the money it has got wisely.
“Businesses tell us they are most concerned about the difficulties in recruiting staff, paying their energy bills and rising taxes.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel