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UK Economic Outlook: The Macroeconomic Outlook for the United Kingdom

Author

Listed:
  • Paula Bejarano Carbo
  • Hailey Low
  • Ben Caswell
  • Stephen Millard
  • Dixon, Huw
  • Mosley, Max

Abstract

As we publish our Winter Economic Outlook, we face the possibility that the United Kingdom was in recession at the end of 2023. Specifically, GDP fell in the third quarter of 2023 by 0.1 per cent and we expect it to have fallen by a further 0.1 per cent in the fourth quarter of 2023. Regardless of whether or not fourth-quarter GDP growth was negative, the overall picture of flatlining output in the United Kingdom, which we have seen now for almost two years, continues. Momentum remains weak as the war in Ukraine continues and events in Israel and Gaza, together with the Houthi attacks on shipping in the Red Sea, raise the possibility of a wider conflict in the Middle East. The labour market continues to loosen, with vacancies falling and unemployment rising, while high inactivity on account of long-term sickness remains an issue. On the bright side, it is beginning to look like the aggressive policy rate hikes have resulted in inflation coming down towards its target and, as a result, real incomes continue to rise as wage inflation remains higher than price inflation.

Suggested Citation

  • Paula Bejarano Carbo & Hailey Low & Ben Caswell & Stephen Millard & Dixon, Huw & Mosley, Max, 2024. "UK Economic Outlook: The Macroeconomic Outlook for the United Kingdom," National Institute UK Economic Outlook, National Institute of Economic and Social Research, issue 13, pages 7-50.
    • Handle: RePEc:nsr:niesra:i:13:y:2024:p:7-50
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    References listed on IDEAS

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    1. Martin Beraja & Andreas Fuster & Erik Hurst & Joseph Vavra, 2017. "Regional Heterogeneity and Monetary Policy," NBER Working Papers 23270, National Bureau of Economic Research, Inc.
    2. Bhattacharjee, Arnab & Szendrei, Tibor, 2021. "Box E: Distributional impacts of Covid-19 and potential for policy intervention," National Institute UK Economic Outlook, National Institute of Economic and Social Research, vol. 0(4), pages 41-44.
    3. Philip McCann, 2020. "Perceptions of regional inequality and the geography of discontent: insights from the UK," Regional Studies, Taylor & Francis Journals, vol. 54(2), pages 256-267, February.
    4. Bhattacharjee, Arnab & Szendrei, Tibor, 2021. "Box E: Distributional impacts of Covid-19 and potential for policy intervention," National Institute UK Economic Outlook, National Institute of Economic and Social Research, issue 4, pages 41-44.
    5. Anna Stansbury & Dan Turner & Ed Balls, 2023. "Tackling the UK’s regional economic inequality: binding constraints and avenues for policy intervention," Contemporary Social Science, Taylor & Francis Journals, vol. 18(3-4), pages 318-356, August.
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