January 06 , 2023 (MLN): The UK economic conditions of 2023 will be almost as deep as that of Russia, economists expect, as reported by CNBC.

Economists’ experts expect a sharp fall in household living standards in U.K. As in 2023 macro-outlook, Goldman Sachs forecast a 1.2% contraction in U.K.

The squeeze on incomes was cited as the main driver, as higher inflation and interest rates significantly curtail household purchasing power.

The Bank of England raised rates by 50 basis points to 3.5% in December, as it looked to rein in inflation, which eased slightly in November from the 41-year high in October.

Similarly, Real GDP over the course of this year, well below all other G-10(Group of Ten) major economies. This is set to be followed by a 0.9% expansion in 2024, the lender anticipates.

As Goldman’s projections for the U.K. are below what it cites as a market consensus that sketches a 0.5% contraction in 2023 and a 1.1% expansion in 2024. However, the Organization for Economic Cooperation and Development has also forecast that the U.K. will lag significantly behind other developed nations in the coming years despite facing the same macroeconomic headwinds, putting London closer in performance to Russia than to the rest of the G-7.

Therefore, the figure places Britain only fractionally ahead of Russia, which the bank projects will see a 1.3% contraction in 2023 as it continues to wage war in Ukraine and weather punitive economic sanctions from Western powers. This will be followed by a 1.8% expansion in 2024, Goldman figures suggest.

The U.K. independent Office for Budget Responsibility projects that the country faces its sharpest fall in living standards on record. Alongside Finance Minister Jeremy Hunt’s budget statement in November, the OBR forecast that real household disposable income — a measure of living standards — will fall by 4.3% in 2022-23.

Consultancy firm KPMG projected that the U.K. real GDP will contract by 1.3% in 2023, amid a “relatively shallow but protracted recession,” before seeing a partial 0.2% recovery in 2024.

The figure places Britain only fractionally ahead of Russia, which the bank projects will see a 1.3% contraction in 2023 as it continues to wage war in Ukraine and weather punitive economic sanctions from Western powers. This will be followed by a 1.8% expansion in 2024, Goldman figures suggest.

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Posted on: 2023-01-06T14:06:42+05:00