RT.com
28 Sep 2023, 04:13 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 Perth Herald 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 Perth Herald.
More InformationREDMOND, Washington: Microsoft President Brad Smith said there is no chance of super-intelligent artificial intelligence (AI) being developed within the ...
The Russian envoy has held talks with the chief of Gujarat, which contains India's largest refineries and an upcoming financial ...
As worries mount about unsustainable levels of debt in the Chinese economy, a major ratings firm on Tuesday announced that ...
Isan region, Thailand - Twenty-three Thai citizens have returned home from a weeks-long ordeal in Gaza; Hamas had taken the ...
Islamabad [Pakistan], December 6 (ANI): Pakistan's National Electric Power Regulatory Authority (NEPRA) on Tuesday approved a Pakistani rupee (PKR) 3.07 ...
Abu Dhabi [UAE], December 6 (ANI/WAM): UAE Banks Federation (UBF) reaffirmed its commitment to support UAE's goals by pledging to ...
The national accounts released by the Australian Bureau of Statistics show economic growth slid to a measly 0.2% in the ...
The principle is vital to cross-Strait stability, a Foreign Ministry spokesperson has saidThe Taiwan question is exclusively China's internal affair, ...
Millions around the world turn to Wikipedia when they want to better understand the world around them, and that apparently ...
New Delhi [India], December 6 (ANI): Arguably among the best in his trade across cricketing generations, star India speedster Jasprit ...
The ?one-China principle? is the solid anchor to cross-Strait stability, a Foreign Ministry spokesperson has saidThe Taiwan question is exclusively ...
Mumbai (Maharashtra) [India], December 5 (ANI): After the end of the five-match T20I series between India and Australia on December ...