The UK will enter a recession before the end of the year, with growth expected to be weak in 2024.
That is the latest forecast from the British Chambers of Commerce (BCC), which says it expects the UK economy to record three consecutive quarters of recession – the definition of a recession – this year.
However, unlike the Bank of England, the BCC expects the economy to grow in 2023, albeit at a very low 0.2%, with a slight increase to 1% in 2024.
The forecast also includes unemployment at 3.8% this year before rising to 4.1% next year and into 2024.
Inflation is expected to peak at 14% in the fourth quarter of this year, fall to 5% by the end of 2023 and beyond the Bank of England’s 2% target by the final quarter of 2024.
Alex Veitch, Director of Policy at the British Chambers of Commerce, said: “The extreme inflationary pressures already in place are now only likely to increase as we head into Christmas; with the UK economy already set to be is in recession.
“Addressing these pressures must be at the forefront of the new prime minister’s inbox when they take office next week.”
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The UK will find out on September 5 whether the next prime minister will be Liz Truss or Rishi Sunak, with Ms Truss as head.
“Action is needed now and the BCC has laid out a comprehensive plan for the government to provide vital support to companies,” Mr Veitch said.
“Along with tax and labor measures, BCC’s business support plan includes key requirements to help businesses with rising energy costs.
“These include COVID-style support by introducing the Government’s Emergency Energy grant, a temporary cut in VAT on energy bills to 5% to reduce costs for companies and enhance regulates the energy market for Ofgem’s businesses.
“Through our extensive research and forecasting work, we know the problems businesses are facing. Time is running out, the government must step up and do what is necessary to protect it. businesses, livelihoods and jobs.”
