The UK economy is likely to see no growth in the aftermath of the Chancellor’s Budget, the Bank of England has warned, as businesses respond to record tax measures by increasing prices and reducing staffing levels.
Policymakers now anticipate the economy will flatline in the final quarter of 2024, a notable downgrade from their previous forecast of 0.3% growth. This comes after figures showed output shrinking in October, prompting concerns that a recession may be on the horizon.
Although the Bank’s Monetary Policy Committee (MPC) voted on Thursday to maintain interest rates at 4.75%, Governor Andrew Bailey indicated that the path ahead remains uncertain. He stressed that the Bank is not in a position to commit to future rate cuts just yet, given the lingering uncertainties following the Chancellor’s maiden Budget.
Analysts have cautioned that households and businesses could face further cost pressures into 2025, leading to a challenging combination of subdued growth and persistent inflation.
A Bank of England survey suggests that a growing proportion of households now expect stagnant economic conditions to become the norm. “There was a common view that the UK was moving from a cost-of-living crisis to a prolonged period of higher costs and lower living standards,” the report noted.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
