Economic indicators show that the UK may sidestep recession this year. However, it may have to deal with other issues that businesses must consider. The Confederation of British Industry (CBI) stated recently that although the British economy is expected to avoid a recession this year, there will still be ongoing issues like low business investment.
Economic Expansion
According to the CBI, the economy is expected to grow by 0.4 per cent in the current year and 1.8 per cent in the following year. The situation is an improvement from the previous prediction of a 0.4 per cent decrease this year and a growth of 1.6 per cent in 2024. The CBI attributed the improvement to lower energy prices, the reopening of China's economy after COVID-19 restrictions, and reduced supply chain disruptions.
International Monetary Fund
The International Monetary Fund also expected that the UK would not fall into a recession and would continue to experience growth in 2023. The IMF predicts that the UK GDP will grow by 1 per cent in 2024 and 2 per cent in 2025 and 2026. This positive, though "subdued," outlook is due to strong demand and falling energy prices.
British Finance Minister
The British Finance Minister stated that there is still work left to be done to handle inflation and enhance the country's growth potential. Jeremy Hunt emphasised that the UK and the world are facing the challenges of high inflation and high energy expenditures. Hunt added at an IMF press conference that the government is making daily efforts to expand the economy and fulfil its priorities and that the IMF has acknowledged these efforts.
Business Investment
Despite the favourable economic forecast, it is worrying that the UK is not doing well in critical areas such as business investment and trade intensity, which are crucial for long-term prosperity. Business investment has been a weakness for the UK economy since the Brexit vote in 2016, and the CBI does not anticipate recovering to pre-pandemic levels before the end of next year. Therefore, it is crucial to make the business environment more appealing to domestic and foreign firms in the coming months.
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