Britain’s economy will grow by less than expected next year as the impact of higher interest rates takes its toll, economists have warned.
In a new forecast, EY cut its expectations for GDP growth in 2024 from 0.8pc to 0.7pc, while the economy is set to remain “sluggish” for the remainder of this year.
Economists blamed a lagged effect from the Bank of England’s recent string of interest rate increases, as well as a weaker-than-expected labour market.
Despite the gloomy forecast, EY upgraded its forecasts for 2023 GDP growth from 0.4pc to 0.6pc after the economy performed better than expected at the beginning of the year.
It said a likely end to interest rate increases, combined with falling inflation and a return to real wage growth should prevent the UK from falling into recession.
Hywel Ball, EY’s UK chairman, said: “The cost of debt is set to be the biggest headwind for the UK economy over the next 12 months, with consequences for both businesses and consumers.”
EY said inflation was now expected to fall slightly faster than previously forecast and could reach 4.5pc by the end of the year, before hitting the Bank of England’s 2pc target in the second half of 2024.
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2023-10-16 06:15:22Z
CBMiaWh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDIzLzEwLzE2L2Z0c2UtMTAwLW1hcmtldHMtbmV3cy11ay1lY29ub215LWxpdmUtaW5mbGF0aW9uLW9pbC1nYXphL9IBAA
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