Crédito y Caución (CyC) expects United Kingdom GDP to contract by -0.7% in 2023, a downward revision of two percentage points from six months ago.
According to a report by the credit insurer, “structural supply-side constraints, limited fiscal stimulus and post-Brexit trade disruptions are exacerbating the negative impact of the war in Ukraine on UK energy prices, consumer confidence and business supply chains”. Unlike the relatively short recession forecast for the US, the UK’s recession will be more deeply based. CyC does not expect the country to reach its pre-pandemic GDP level until 2025 and forecasts that the weak recovery will not take hold until 2024, with growth forecast at 1.8%.
“Inflation reached its highest rates since 1981 in 2022. Rising food prices and higher import costs due to the weak pound sterling have been compounded by double- and triple-digit price developments for electricity and gas,” the report says. Wages, according to the C&C projection, have failed to keep pace with inflation, weighing on the purchasing power of the British people.