In 2022, the UK economy witnessed a 4.3 per cent annual growth, buoyed by a resurgence in demand following the pandemic's disruption. However, 2023 has unfolded as a year of economic deceleration, with growth anticipated to slow down to a mere 0.4 per cent. This slowdown is attributed to various challenges, including supply-side headwinds, increased input costs, and supply chain disruptions, leading to a significant rise in consumer prices, the Centre for Economics and Business Research (CEBR) said in its report titled ‘World Economic League Table 2024’.
The inflation rate, while decelerating from 2022's 9.1 per cent to an estimated 7.5 per cent in 2023, remains above historical norms. The Bank of England, mirroring global central bank trends, has aggressively raised interest rates from a record low of 0.1 per cent to 5.25 per cent to combat inflation. These measures, while slowing inflation, have also dampened investment and spending, impacting economic output.
The labour market reflects the economy's broader challenges, with a slight increase in unemployment rates to 4.2 per cent. Despite this, the UK benefits from historically low unemployment levels and robust nominal wage growth, fuelling consumption.
The UK's economic trajectory remains cautious, with projections of just 0.5 per cent growth in 2024. A recovery is anticipated in 2025 with a projected growth of 1.9 per cent as monetary policies ease. The economy is then expected to stabilise with an annual growth rate between 1.6 per cent and 1.8 per cent.
ALCHEMPro News Desk (KD)
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