National Institute of Economic and Social Research (NIESR) forecasts a modest rebound in UK’s monthly GDP in April with growth of 0.3%, largely driven by services sector. However, this is viewed as a modest increment rather than the robust ‘jump-start’ the UK economy may need. Paula Bejarano Carbo, Associate Economist at NIESR, highlighted the situation as “(welcome) low growth”.
Meanwhile, the think tank significantly downgrades annual GDP outlook for 2023 to a mere 0.3%, a stark contrast to 4.1% achieved in 2022. This economic stagnation is attributed to persistently high inflation and interest rates, which continue to weigh heavily on household and corporate budgets, and is expected to suppress demand in the forthcoming months.
The forecast paints a paradoxical picture of the UK’s economic future. While there is cautious optimism as it appears the worst of the energy price shock has passed and the country seems poised to avoid an imminent recession, the subdued outlook suggests that it will feel like a recession for many households. NIESR predicts an average fall in real personal disposable incomes of approximately 2% over the next three years, further pressuring households already grappling with the economic challenges.
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