Depending on who you listen to or what you read the UK economy is either shrinking rapidly or ticking along nicely. It might either stop and shrink in the second half of the year or might keep going.
Nobody knows for sure but the official evidence might give us some clues as to what is really going on.
The British Chambers of Commerce (BCC) announced their forecasts for the UK economy from now until the end of 2024 and the predictions are intriguing.
- Growth – predicted to be 3.5% this year; 0.6% in 2023 and 1.2% in 2024
- Household consumption – will grow 4% in 2022; 0.6% in 2023 and 1.2% in 2024
- Business Investment – will grow 1.8% in 2022; 0.8% in 2023 and 1.5% in 2024
- Inflation – will peak at 10% in Q4 2022; will fall to 3.5% in 2023 and be down at 2% in 2024
- Interest Rates – expected to rise to 2% by Q4 2022; 3% in 2023 and remain at 3% in 2024
The BCC’s director of policy Alex Veitch said: “The latest forecasts suggest that the UK economy is facing headwinds that will bring sluggish growth prospects and continued inflationary pressures.
“The Ukraine conflict came at the time the UK was beginning its Covid recovery which put businesses under further pressure regarding their profitability.
“We’re particularly concerned about the drop in business investment. Its vital urgent action is undertaken by the government especially when it comes to incentivising business investment including its review of capital allowances.
“Inflation is forecast to race ahead of wages which would indicate a dip in consumer spending which would further hurt growth and impact business profitability.
“If the trends remain the same and the forecasts are accurate and inflation will only reach 2%, the Bank of England’s target, by the end of 2024 then this will be a difficult period.”
The latest findings from the Office for National Statistics (ONS) confirms the darkening clouds facing the UK economy.
They recorded a decline of 0.3% in the UK’s GDP in April following a 0.1% decline in March. At the same time there were reductions in activity in the construction, production and services sectors for the first time since January 2021.
At the same time average wages in the UK were falling at their fastest rate for over a decade. They fell by 2.2% in the three months up to April 2022 as annual pay fails to keep up with the rising cost of inflation.
With the screw tightening on businesses everywhere they look, they might be wondering what they can do to relieve the pressure.
Getting in touch with BusinessRescueExpert for some free advice would be one easy and sensible strategy.
They will be able to outline options for companies to make important changes that will give them the best chance of surviving the choppy waters ahead.