Why Britain Has a Bumpy Road to Recovery Ahead
Why Britain Has a Bumpy Road to Recovery Ahead
The Bank of England forecasts that growth would be negative for the UK in 2023 and KPMG projected that the UK could fall into a recession next year as inflation bites. Struggling post-Brexit the United Kingdom has a number of difficulties it has to overcome. A recent article by Bloomberg highlights what they are.
Consumers are gloomy
High inflation, disgruntled unions, canceled holiday flights, and surging costs of living mean that Britons are more pessimistic than at any time in at least 50 years. This is the gloomiest UK confidence has been as post-Brexit and COVID realities sink in.
Slowing UK economy
The Office for National Statistics reports that the average rate of annual growth for Britain between 1998 & 2007 was 2.7%. Between 2010 & 2019 it was 2%. Concerningly, the rate of UK growth is set to fall again to an average of 1.8% between 2023 & 2026.
Surging inflation
The UK was one of the first central banks to act against inflation by hiking interest rates as it feared a wage-price spiral. However, the Bank Of England sees worse inflation to come as energy prices take another rise higher in October as the energy price cap is raised again. The BoE projects a rate of 11% for the UK.
Drop in investment
Once the UK voted to leave the UK there was a huge drop in investment. The uncertainty that the UK’s vote prompted is at least part of the reason for a significant investment drop off.
So, the road is bumpy for the UK as it seeks to avoid a coming recession. For more details on the reasons for the UK’s struggling economy you can read Bloomberg’s full piece here.
About: HYCM is the global brand name of HYCM Capital Markets (UK) Limited, HYCM (Europe) Ltd, HYCM Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under HYCM Capital Markets Group, a global corporation operating in Asia, Europe, and the Middle East.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.
20220628
