The British Chamber of Commerce (BCC) expects the UK economy to plunge into recession before the end of this year, with inflation spiking to 14 per cent and lingering weakness in growth expected to continue into 2024. The chamber again downgraded its expectations for gross domestic product (GDP) growth for 2022 to 3.3 per cent (from 3.5 per cent in the second quarter) against a deteriorating economic outlook.

UK inflation is now expected to reach 14 per cent in Q4 2022, an upwards revision of four percentage-points from its previous projection of 10 per cent, BCC said in a release.

The British Chamber of Commerce expects the UK economy to plunge into recession before the year-end, with inflation spiking to 14 per cent and lingering weakness in growth expected to continue into 2024. It again downgraded its expectations for 2022 GDP growth to 3.3 per cent (from 3.5 per cent in the second quarter) against a deteriorating economic outlook.

In the short term, the chamber is now forecasting a recession for the UK economy with three consecutive quarters of contraction between Q2 and Q4 in 2022. The country recorded 7.4 per cent growth in 2021.

However, unlike the Bank of England, the BCC expects the economy to grow in 2023, albeit at a very low 0.2 per cent, with a slight increase to 1 per cent in 2024.

These ‘anaemic predictions’ for GDP growth are in light of deteriorating economic conditions; rising energy costs, a decline in household spending and real wages; weaker export prospects and a pessimistic global economic outlook; poor investment conditions and weakening business confidence and cashflow, BCC said in the release.

Many of these issues were initially caused by the global response to COVID-19 and have been further compounded by the war in Ukraine, it noted.

Businesses and consumers will continue to face exceptionally high costs as rampant inflation spirals upwards in 2022.

Increased and more sustained inflationary pressure is now forecast for Q4 2022, as the consumer price index (CPI) inflation rate is expected to reach a peak of 14 per cent. This is up from the previous, already high, projected rate of 10 per cent.

The CPI rate is expected to slow to 5 per cent in 2023, and finally return to the Bank of England’s target of 2 per cent in 2024, BCC said.

Business investment is set to grow at 2.7 per cent this year, an upward revision from the Q2 forecast of 1.8 per cent. Overall investment is expected to grow by 4 per cent this year but shrink by 0.4 per cent in 2023 before rebounding to 1.1 per cent in 2024.

Consumer spending is now forecast to grow at 3.8 per cent in 2022, a fall from the 4 per cent predicted in Q2, BCC added.

Fibre2Fashion News Desk (DS)un