Britain is set to avoid a recession this year although the country will face at least another year of high inflation, new forecasts show. Accountancy firm PwC released the fresh predictions last night, adding another organisation to the list of experts and government bodies that have ditched their dire prophecies of Britain’s economic decline this year.
PwC predicts that Gross Domestic Product, a measure of the total value added to the economy, will make an improvement of 0.1 percent this year.
Despite Britain’s predicted slow economic come-back following, Britons will likely have to push through another year of price rises. But experts think the worst is over.
Barret Kupelian, a senior economist at PwC, said Britain had “very much passed through the eye of the inflationary storm compared to last year”.
He added the economy was “showing signs of a return to some sort of normality this year”.
Inflation currently sits at 10.1 percent and there is a risk that it will remain high, even though the Bank of England chief Andrew Bailey and his team are trying to tame the rate.
PwC thinks Britain will remain above the BoE’s target of two percent inflation until 2024.
Despite avoiding recession, UK growth is likely to remain sluggish with PwC suggesting it will only reach 1.6 percent in 2025.
The Bank of England’s chief economist, Huw Pill recommended reluctant Britons to ride the inflationary wave and “accept they’re worse off” earlier this week. He was met with outrage among many struggling families, although others suggested it was good advice.
He said businesses have responded to higher bills and costs by increasing their prices, while workers have been asking for wage rises.
He then reiterated warnings from BoE governor Andrew Bailey that the higher wages and price increases ruin the institution’s efforts to calm down inflation.
Inflation is linked to loads of factors that the bank can’t control, including energy costs, but its control is further weakened by the choices businesses and workers make.
Britain has also seen positive economic results in other areas, including the price of the pound.
Raoul Ruparel, Director of the Boston Consulting Group Centre for Growth, suggested the surging pound was being “under-discussed”.
Data from Macrobond and ING also suggests the UK will maintain higher interest rates than the Eurozone across the rest of this year.
Dominic Bunning, head of European FX research at HSBC, told Bloomberg: “The reality is, things aren’t as bad as everyone worried they would be. It’s only now that people are starting to wake up to this idea.”