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 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 InformationGENEVA, Switzerland: A new United Nations report alleges that dozens of global corporations are profiting from and helping sustain...
LONDON/STOCKHOLM: The Persson family is ramping up its investment in the H&M fashion empire, fueling renewed speculation about a potential...
LONDON, U.K.: British oil giant Shell has denied reports that it is in talks to acquire rival oil company BP. The Wall Street Journal...
SYDNEY, Australia: Australia will not ease its strict biosecurity rules during trade talks with the United States, Prime Minister Anthony...
BEIJING, July 5 (Xinhua) -- No dull rows of chairs and tables, no endless slides of charts and numbers -- instead, a gleaming statue...
KHARTOUM, July 5 (Xinhua) -- After more than two years of devastating conflict, Sudan's capital Khartoum is slowly emerging from the...
Nearly three months after a devastating earthquake struck Myanmar, the country remains trapped in a deepening crisis, compounded by...
MELBOURNE, Australia: A second embryo mix-up in just two months has pushed one of Australia's largest IVF providers back into the spotlight,...
SYDNEY, Australia: Australia will not ease its strict biosecurity rules during trade talks with the United States, Prime Minister Anthony...
Birmingham [UK], July 5 (ANI): Indian skipper Shubman Gill concluded a record-breaking Birmingham Test against England with breathtaking...
Birmingham [UK], July 5 (ANI): The Indian cricketing fraternity expressed happiness as skipper Shubman Gill continued his monumental...
Birmingham [UK], July 5 (ANI): Indian skipper Shubman Gill's dreamy, record-breaking continued to tire out bowlers and statisticians...