The British Chambers of Commerce (BCC) has adjusted its GDP forecasts, revealing a stagnant UK economy until the close of 2025.
The BCC's Quarterly Economic Forecast anticipates sluggish growth with rates of 0.6% in 2023, 0.4% in 2024, and a marginal rise to 0.6% in 2025.
Persistent challenges include high interest rates, EU trade barriers and constrained consumer spending, contributing to a subdued growth climate.
Despite core inflation surpassing CPI rates, businesses' expectations for price hikes are diminishing, with predicted CPI rates of 4.6% in Q4 2023, 3.1% in Q4 2024, and 1.9% in Q4 2025.
Trade is set to face hurdles, with export growth at 0.5% and 1.2% in the next two years, while the outlook for imports is similarly lacklustre due to regulatory changes at UK and EU borders.
The BCC projects a business investment contraction of 0.8% in 2024, rebounding to 1.2% in 2025. Despite a gloomy economic outlook, average earnings are expected to outpace inflation, with a slow decline in the Bank of England interest rate to 4.25% in Q4 2025.
Concerns persist over a higher unemployment rate, projected at 4.8% by the end of 2025, but recruitment difficulties persist, notably in the hospitality, construction and manufacturing sectors, according to BCC research.
Vicky Pryce, chair of the BCC Economic Advisory Council, said:
"The Government set out several pro-growth measures in the Autumn Statement, but businesses and consumers have had their fingers badly burned by the pandemic and ensuing economic shocks.
"It will take a Herculean effort to shift the dial on investment and consumer spending, against that background, and inject some much-needed vitality. The minimum wage increase early next year will further impact investment concerns among businesses, as cost pressures rise."
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