ritain will narrowly avoid a recession this year – but people and businesses will still feel the pain akin to the 2008 financial crash, according to an influential business network.
The UK economy is on course to eke out growth of 0.4% over 2023, the British Chambers of Commerce (BCC) predicted in its latest quarterly economic forecast.
It is a marginal upgrade from the 0.3% gross domestic product (GDP) level previously forecast by the group.
The fact is, that with growth predicted to hover so close to zero for three years, it will still feel a lot like one for most people and businesses
GDP will then drop to 0.3% over 2024 and nudge up slightly to 0.7% over 2025, a downgrade from its previous expectations.
It means the nation could avoid falling into a technical recession, which is defined as two consecutive quarters of negative growth.
But the meagre growth level over a prolonged period of time is comparable to previous periods of economic shocks and recessions, such as the oil crises of the 1970s and the 2008 financial crisis, the BCC warned.
“The BCC’s latest forecast shows the UK economy is continuing to teeter on the edge of a recession”, Vicky Pryce, senior member of the BCC Economic Advisory Council said.
“But the fact is, that with growth predicted to hover so close to zero for three years, it will still feel a lot like one for most people and businesses.”
The forecast from the BCC, which represents thousands of firms across the UK, is close to the Bank of England’s most recent expectations of 0.5% GDP over 2023 and 2024.
The slower growth predictions for the next two years reflect the impact of inflation and interest rates squeezing household disposable incomes and therefore spending levels, and dampening over business investment, the BCC said.
There is currently little on the table to provide companies with any crumbs of comfort
Nevertheless, fewer businesses now expect their prices to rise over the coming months, indicating hopes that inflation will not rise any further.
But the Consumer Prices Index (CPI) inflation rate is not expected to return to the Bank’s 2% target until the final few months of 2025, as prices remain elevated for a further two years, the updated forecast found.
Furthermore, it forecasts that UK interest rates will peak at 5.5% and remain above 5% throughout the year ahead.
Ms Pryce added: “There is currently little on the table to provide companies with any crumbs of comfort.
“As we head towards an election next year, politicians will have to show how they will work with the business community to find solutions.”