Britain will dodge recession this year but its people will face the after-effects of a severe fall in living standards caused by surging inflation, which will leave millions struggling to pay their bills, academic researchers forecast on Wednesday per Reuters.
“Britain's National Institute for Economic and Social Research (NIESR) cut its forecast for gross domestic product growth this year to 0.2% from 0.7% in its last forecast in November, and sees growth of 1.0% in 2024, down from 1.7%,” reported Reuters.
The news also quotes NIESR Director Jagjit Chadha saying that the forecasts painted "an incredibly depressing picture", particularly for living standards which are set to stagnate this year after falling sharply last year due to the surge in energy prices.
Key quotes
One in four British households would be unable to pay for food and energy without using up savings, borrowing or seeking other help in the 2023/24 financial year, up from one in five during the current year.
Overall, most Britons needed to accept that their incomes had fallen in real terms and could not be easily made up by higher pay, Chadha said - echoing a message from the Bank of England last week when it raised interest rates to a 14-year high of 4% to tackle inflation that is still above 10%.
The poorest 10% of Britons had seen a little drop in income - thanks to welfare benefits rising in line with inflation - but middle-income households faced a fall in real income of up to 13% or 4,000 pounds ($4,800) during the year to the end of March 2023.
NIESR's growth forecasts are somewhat more upbeat than those of the BoE and the International Monetary Fund (IMF), which both forecast last week that Britain's economy would shrink in 2023.
Market reaction
The news fails to tame the GBP/USD prices as the Cable pair defends the previous day’s rebound from the one-month low, mildly bid around 1.2060 at the latest.
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