The UK economy will not recover from Covid-19 until the end of next year as Britain faces high interest rates, increased unemployment and two years of ‘stuttering growth’
- The ‘stuttering growth’ is amid ongoing pressure from high interest rates
- It comes after Bank of England hiked its interest rates for 14th time since 2021
The UK’s economy will not recover from the Covid-19 pandemic until the end of next year, a report warns today.
Britain is instead on course for ‘stuttering growth’ over the next two years amid ongoing pressure from high interest rates and increased unemployment.
The economy will grow 0.4 per cent this year and a further 0.3 per cent in 2024, the National Institute of Economic and Social Research (Niesr) predicted.
This was a downgrade from the 0.6 per cent growth that the think-tank previously forecast for next year, which it blamed on higher-than-expected borrowing costs hitting households.
As a result, it will be another year until the economy gets back to where it was before coronavirus struck in early 2020.
The stark message came after the Bank of England last week hiked interest rates for the 14th time in a row since 2021, raising its base rate to 5.25 per cent
The stark message came after the Bank of England last week hiked interest rates for the 14th time in a row since 2021, raising its base rate to 5.25 per cent.
Professor Stephen Millard, from Niesr, said: ‘The triple supply shocks of Brexit, Covid and the Russian invasion of Ukraine, together with the monetary tightening that has been necessary to bring inflation down, have badly affected the UK economy.
‘As a result, we expect stuttering growth over the next two years and GDP to only recover to its 2019 fourth quarter level in the third quarter of 2024.’
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