RT.com
27 Sep 2023, 23:43 GMT+10
Persistent inflation is among the factors expected to damage growth prospects, according to a US think tank
The British economy will shrink in both 2023 and 2024, The Guardian reported on Wednesday, citing a study by the Washington-based Peterson Institute for International Economics (PIIE).
According to the report, persistent inflation, falling real incomes of low-income households, and a shortage of workers will result in a 0.3% drop in the country's gross domestic product (GPD) this year, and a further 0.2% backslide next year.
"The UK won't be in recession all of next year, but the recovery will be held back by higher-than-expected inflation and in response, the Bank of England will need to keep interest rates higher for longer," PIIE president Adam Posen told The Guardian, commenting on the report.
Posen, who used to work on the Bank of England's monetary policy committee, noted that the UK economy is also still weighed down by the aftereffects of Brexit and will likely suffer from planned cuts to government spending next year.
Last week, the central bank refrained from hiking interest rates for the first time in nearly two years after a surprise drop in inflation in August to 6.7% amid weaker growth in food prices and a reduction in accommodation and air travel costs. However, UK inflation remains the highest among G7 economies.
Posen warned that more rate hikes are possible in the coming months if inflation doesn't slow further. Karen Dynan, a co-author of the report, mirrored the institute's warning and said it does not apply to the UK alone.
"While inflation appears to be receding in most countries, it remains decidedly above central bank targets. As a result, most central banks will need to keep their policy rates high over the coming year, with the resulting tight financial conditions holding back demand and slowing economic activity," she stated.
For more stories on economy & finance visit RT's business section
(RT.com)
Get a daily dose of Orlando Echo news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Orlando Echo.
More InformationATLANTA, Georgia: The United States is facing its worst measles outbreak in more than three decades, with 1,288 confirmed cases so...
In the past month alone, 23 Israeli soldiers have been killed in Gaza—three more than the number of remaining living hostages held...
LONDON, U.K.: At least 13 people are believed to have taken their own lives as a result of the U.K.'s Post Office scandal, in which...
WASHINGTON, D.C.: Travelers at U.S. airports will no longer need to remove their shoes during security screenings, Department of Homeland...
WASHINGTON, D.C.: An elaborate impersonation scheme involving artificial intelligence targeted senior U.S. and foreign officials in...
SLUBICE, Poland: Poland reinstated border controls with Germany and Lithuania on July 7, following Germany's earlier reintroduction...
ATLANTA, Georgia: The United States is facing its worst measles outbreak in more than three decades, with 1,288 confirmed cases so...
WASHINGTON, D.C.: After months of warnings from former federal officials and weather experts, the deadly flash floods that struck the...
(Photo credit: Wendell Cruz-Imagn Images) Cody Bellinger hit three homers for the first time in his career and drove in six runs,...
(Photo credit: David Butler II-Imagn Images) Ceddanne Rafaela hit a walk-off, two-run home run in the bottom of the ninth inning...
(Photo credit: Daniel Kucin Jr.-Imagn Images) Baltimore starter Dean Kremer held the visiting Miami Marlins to three singles across...
(Photo credit: Nathan Ray Seebeck-Imagn Images) The Tampa Bay Rays placed All-Star second baseman Brandon Lowe on the 10-day IL due...