NIESR forecasts a stagnation in UK’s GDP growth in Q2, suggesting that the trend of low economic growth will continue for the foreseeable future.
Paula Bejarano Carbo, an Associate Economist at NIESR, pointed out the influence of the current high Bank Rate, stating, “With the Bank Rate now at 5 per cent, suppressing demand, UK growth will continue to be anaemic at best in the coming months.”
The lingering effects of inflation, which is expected to remain high, are predicted to put a strain on household budgets, and in turn, restrain near-term demand. The high cost of borrowing is another contributing factor that is likely to impact consumer spending and growth.
The think tank indicated that these circumstances might particularly impact the service sector. It warned that service-sector output may continue to stumble, dragging down overall GDP in the upcoming months.
NIESR’s analysis further emphasized that the risks associated with GDP appear to be tilted towards the downside at the moment, due to persisting economic pressures.
