UK Economic Outlook: The Macroeconomic Outlook for the United Kingdom

With King Charles crowned last weekend, it feels like a new era is on the horizon for the United Kingdom. Indeed, in the period between our Winter and Spring Outlooks the UK economic outlook has improved a little, with a recession in 2023 now looking less likely. But the UK economy is still facing the problems of sluggish growth and high inflation and while the Chancellor's Spring Budget of 15 March contained a number of policies that represented steps in the right direction, there was not the fundamental shift in the direction of public investment that will be needed if UK productivity growth is going to return to anything like pre global financial crisis rates. Nonetheless, there is some reason for optimism. As noted in our April GDP Tracker (Bejarano Carbo and Nowinska 2023), we now expect GDP to have grown by 0.1 per cent in the first quarter of 2023 and we expect GDP to grow a further 0.3 per cent in the second quarter of 2023. Looking further ahead, we expect sluggish growth in 2023 and 2024 of 0.3 and 0.6 per cent, respectively. At least to begin with, the third Carolean era is not going to herald a new dawn of high output growth.