UK GDP forecast cut, inflation forecast raised

The National Institute for Economic and Social Research (NIESR) in the UK with a worsening outlook:

• UK GDP +0.2% in 2023, +1.0% in 2024 (its November forecasts: 2023
  +0.7%, 2024 +1.7%)
• UK CPI averaging
  8.3% in 2023, 4.2% in 2024 (November forecasts: 2023 8.0%, 2024 3.9%)

Reuters add that:

• NIESR Director Jagjit Chadha said the forecasts painted “an incredibly depressing picture”, particularly for living standards which are set to stagnate this year after falling sharply last year due to the surge in energy prices.
• One in four British households would be unable to pay for food and energy without using up savings, borrowing or seeking other help in the 2023/24 financial year, up from one in five during the current year, NIESR said.
• there was little sign of businesses reducing prices, even after big falls in costs such as shipping

NIESR’s growth forecasts are somewhat more upbeat than those of the BoE and the International Monetary Fund (IMF), which both forecast last week that Britain’s economy would shrink in 2023.

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