UK economy to be in recession for more than a year - British Chambers

The UK economy is likely to remain in recession for five quarters before an anaemic recovery in 2024, according to an economic forecast released today.

The British Chambers of Commerce 's quarterly economic forecast predicts the economy will not return to growth until Q4 of 2023.

However, the BCC adds inflation has likely peaked at 11 per cent and is expected to slow to five per cent by the end of next year.

While the economy is predicted to grow in 2024, it is likely to be a weak recovery as business investment, exports and household consumption all remain subdued. ??

?Alex Veitch (pictured), director of policy?at the British Chambers of Commerce, said:? “BCC research has shown that business confidence has been falling for months. It is now clear that the September mini-budget and Autumn Statement have had a further chilling effect.

“Very few firms will be willing to invest as they face into a wall of higher prices, interest rates and taxes.

“The very real worry is that the UK will get left behind by our competitors, once the economy emerges from recession, as growth remains so weak.

“But it is not too late to turn this around. With concrete action on infrastructure investment, skills, trade, and green tech we can put the economy in a much stronger position.

“The next Budget, due in March 2023 will be a real acid test of whether the Government fully understands the scale of the problems ahead and is prepared to act.

“In the meantime, the forthcoming announcement on energy bill support for businesses will be watched closely by firms for signs that the Government grasps the size of the challenges they face. ”

The annual expectation for GDP growth in 2023 is now -1.3 per cent, broadly in line with the OBR and Bank of England 's predictions.

However, unlike the Bank of England, the BCC expects the economy to grow in 2024, albeit at 0.7 per cent, which is around half of the OBR 's forecast.

A key contributor to the 2023 economic contraction is a sharp fall in household spending as consumers face rising energy costs, falling real wages, frozen income tax allowances and higher mortgage payments.

A poor outlook for the global economy means exports are also likely to fall, although they will be outstripped by a sharper decline in imports.