In the new economic forecasts, British Chambers of Commerce projected that UK inflation rate will reach 10% in Q4 this year, “comfortably outpacing average earnings growth”. That would be the highest since CPI records began in 1989. CPI is only expected to finally fall back to BoE’s target of 2% by the end of 2024. BoE interest rate is expected to rise to 2% in 2022, and 3% in 2023.
GDP growth in 2022 was downgraded slightly from 3.6% to 3.5%. Quarter on quarter GDP growth is expected to ” flatline with no growth expected in Q2 and Q3 before contracting by 0.2% in Q4″. Growth is expected to slow sharply to just 0.6% for 2023, before recovering slightly to 1.2% in 2024.
Alex Veitch, Director of Policy at the British Chambers of Commerce, said: “Our latest forecast indicates that the headwinds facing the UK economy show little sign of reducing with continued inflationary pressures and sluggish growth. The war in Ukraine came just as the UK was beginning a Covid recovery; placing a further squeeze on business profitability.”
