The UK economy has suffered more severe blows than any other leading nation and the forecast for the country remains grim amid negative trends in the global economy.
Recession, devaluation of the pound, inflation and shrinking economy are some of the indicators predicting the negative trend of the British economy.
The UK GDP fell 0.2% in the third quarter- between July and September- ending five consecutive quarters of growth. It is the only G7 economy to contracted in the third quarter and is now smaller before the coronavirus pandemic began.
Country’s Longest Recession
Earlier this month, the Bank of England warned the country is facing its longest recession since records began, with the economic downturn expected to extend well into 2024. The recession will push half around a million people out of work while the British households face the biggest fall in living standards.
The growth is projected to continue to fall throughout next year and the first half of 2024. The projection as the bank raised its benchmark interest rate by a historic 75 basis points, which is the largest increase since 1989.
OECD Projections
The UK will be one of the poorest performers among the world’s big 38 members economies next year as the global economy continues to suffer the knock-on effects of the biggest energy shock in four decades, Organisation for Economic Co-operation and Development warned in its latest report.
Among the G-20 economies, the negative growth is projected for Russia, UK and Germany.
OECD’s acting chief economist, Álvaro Pereira, said the UK’s negative performance was due to a combination of factors which include rising interest rates, government action to bring down borrowing and debt, and the market turbulence during Liz Truss’s tenure as prime minister.
Currently, the UK is the only G7 country with a smaller economy than before the Covid-19 crisis. The average real wages are still below their pre-2008 level, and are not forecast to exceed it before 2028, according to a report in Rosa Luxemburg Stiftung.
Brexit Still Haunts
The advocates of Britain’s exit from the European Union had presented a Utopian picture where the Brexit would have removed all the hurdles from the economic growth.
But six and a half years later after the Brexit referendum, it had turned a nightmare for the British as it had done more harm than good. The UK is now facing prolonged recession, high cost of living and unemployment.
Experts predict that the Brexit has reduced Britain’s GDP by at least 4 percent. In terms of its political implications, it had given Britain its fifth PM in six years, pushing the country to its unprecedented political crisis.
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