CBI Lead Economist, Alpesh Paleja, looks at the road ahead for the UK economy.
UK outlook: darkest before dawn
Recent data on economic activity has largely been negative, and we expect the UK economy to have entered a recession in Q3. At the heart of this is the strength in inflation: while price pressures wane over 2023, they remain high, which leads to further falls in household incomes and spending. The weakness in activity also drags on private-sector investment.
However, we expect the recession to be relatively short-lived, with the economy returning to growth over 2024 – principally as further falls in inflation alleviate the squeeze on household incomes. But longer-term economic challenges remain firmly in place, with both GDP and productivity remaining well below their pre-pandemic trends at the end of our forecast.
GDP
2023 to see a mild recession
The early autumn saw significant volatility in UK financial markets, as investors reacted to the Truss administration’s
Exclusive member-only content
