The UK economy is only expected to recover to it's pre-COVID size in late 2024, according to new independent research.
The National Institute of Economic and Social Research (NIESR) has issued a new forecast for the progress of the UK economy. Key points include:
- Real economic growth will remain weak, with the economy not expected to return to pre-Covid value until the end of 2024. This implies five years of “lost growth” for the UK.
- Risk of recession within the next two years remains high.
- Inflation is expected to be above the Bank of England’s 2% target rate until 2025. Uncontrolled inflation is seen as a key risk to economic recovery.
- The Bank of England is urged to give more clarity on its view of inflation outcomes and the likely future path of interest rates.
- Real wages in multiple UK regions are expected to remain significantly below pre-Covid levels until 2025.
- Wealth inequality is expected to increase, with the least well-off households at high risk of “destitution”.
Overall, this report offers a downbeat view of the UK’s economic future, but one which is broadly in-line with IGD’s expectations.
In our latest Viewpoint report: Persistent inflation, politics and labour challenges, we also noted that rising interest rates will have a significant impact on household prosperity.
Food and grocery businesses should anticipate ongoing financial and material hardship for many shoppers – perhaps most.
Shoppers will likely continue to focus on value, using familiar techniques – planning ahead, shopping around, minimising waste and so on.
Food and grocery businesses have become accustomed to operating in this difficult economic environment, but business leaders must look ahead and focus on preparing for eventual economic recovery.
The industry must make further progress on challenges such as climate change, food security, nutrition, waste management and so on.
The economy may be flat-lining, but the food and grocery supply chain cannot.
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