According to the latest forecasts of financial analysts in London, the British economy is likely to avoid recession, contrary to previous forecasts. The revised spring forecasts of the ITEM Club, a London-based economic think tank affiliated with global financial advisory firm EY, on Monday indicated that gross domestic product (GDP) in Great Britain – the largest European economy outside the EU – will expand by 0.2% in a year. 2023 as a whole.
This is a significant improvement, as the house predicted a 0.7 percent drop in British GDP for this year in its previous winter forecast.
The ITEM Club expects UK GDP to grow unchanged at 1.9% by 2024.
The company justified revising this year’s expectations by saying that the performance of the British economy in the fourth quarter of last year was better than expected, and that inflation this year is calculated for a twelve-month period that has been higher than 10 percent since September of last year, and is likely to start to decline. gradual deterioration.
Because of the work stoppage, the GDP stagnated in February.
British inflation peaked at 11.1 per cent in October last year – annual inflation has not been seen at this rate in four decades – and has been declining since then, but is still five times higher than the Bank of England’s target of 2 per cent: the 10.4 percent measured Inflation in February for a twelve-month period in Great Britain.
ITEM Club analysts in London presented their forecast on Monday
By the end of 2023, the inflation rate is likely to be less than 3 percent.
And they emphasized: According to their calculations, energy prices in February added another 3.2 percentage points to the annual inflation calculated for the entire basket, but in the fourth quarter of this year, the annual inflation rate is expected to decrease by 0.5 percent.
According to the company’s forecasts, British households’ energy bills will fall by nearly 20 percent in July compared to their peak.
With all this in mind, analysts at the EY ITEM Club have announced that they no longer expect a technical recession or a year-long downturn in the British economy.
According to the consensus definition, a technical recession occurs when the value of GDP in an economy declines in two consecutive quarters.
Although the British economy narrowly escaped a technical recession, it has so far avoided it.
According to the latest data from the British Office of Statistics (ONS), the performance of the British economy expanded by 0.1 percent in the three months ending in February compared to the three comparison period that ended in November. In the three months ending in November, Britain’s gross domestic product fell by 0.3 percent.
According to the adjusted calculations of the Office for National Statistics, the value of Britain’s gross domestic product increased by 0.4 percent in January this year, and stagnated in February, calculated in a monthly comparison.
At the same time, there is no consensus in the international analyst community that the British economy will avoid the expected full-year contraction this year.
The International Monetary Fund, in its latest World Economic Outlook, predicted that the value of British GDP would decline by 0.3 percent in 2023 and expand by only 1 percent next year. In its previous report, published in January, the Currency Fund estimated a 0.6 percent drop in the British economy this year as a whole.
The International Monetary Fund confirmed that throughout the year, the British economy presented the weakest performance among the group of twenty of the twenty largest developed and emerging economies in the world.
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