Brexit Blues: Brace for Britain’s Economy to Lag Behind Eurozone in 2022

“UK Economic Growth Expected to Lag Behind Eurozone in 2024, Inflation Remains High: Forecasts Paint Gloomy Picture for General Election”
Brexit Blues: Brace for Britain's Economy to Lag Behind Eurozone in 2022

Britain’s economic growth is predicted to lag behind the eurozone in the coming year, while inflation is expected to remain high, according to new forecasts. Economists surveyed by Bloomberg anticipate that the UK’s gross domestic product will grow by just 0.6% in 2024, compared to the projected 1% gain in the euro area. This represents a downward revision of 0.3 percentage points from the previous reading, marking the largest change in the poll. The current year is also expected to see meager growth of 0.2%. Despite concerns of a potential recession, most economists still anticipate that the UK will avoid a prolonged contraction. However, the outlook is deteriorating, and stagnation is predicted through 2024, which could pose challenges for Prime Minister Rishi Sunak’s bid to win the upcoming general election.

Confidence among chief financial officers (CFOs) of major UK listed companies has seen a sharp decline. A Deloitte survey revealed that a net balance of 10% of CFOs were less optimistic about their businesses’ financial prospects compared to three months ago. This is a significant decrease from the previous quarter, which saw a balance of 25% expressing greater optimism. Both the Conservative government and the Labour opposition are expected to focus on the economy in their election campaigns, as they seek to gain support from struggling households and businesses. According to the latest YouGov/Times poll, the Conservatives currently hold just 25% of the vote, while Labour leads with 43%.

The Confederation of British Industry (CBI) has entered the debate by suggesting that green growth initiatives, aimed at transitioning the UK from fossil fuels to clean energy, could provide a Β£57 billion (€66 billion) boost to GDP by 2030. This would be equivalent to 1.6% to 2.4% of GDP. While the UK struggles to gain momentum, the eurozone is expected to experience growth of 0.5% this year and 1% next year. Strong recoveries in France, Italy, Spain, and Germany in 2024 are anticipated to contribute to the region’s performance, according to the Bloomberg survey. Inflation expectations for the UK have also been revised upwards compared to other major European economies. Economists predict that Mr. Sunak will achieve his target of halving inflation by the end of the year, but they now anticipate a rate of 4.8% for the fourth quarter, up from the previous estimate of 4.6%.