According to the most recent edition of PwC’s UK Economic Outlook, the UK is predicted to avoid recession in 2023 and start returning to trend growth rates towards the end of next year, although its recovery is still lagging in comparison to G7 peers.

The UK economics team at PwC anticipates growth of about 0.1% in 2023, 1% in 2024, and 1.6% by the end of 2025 as inflation pressures start to dramatically reduce in the ensuing months.

According to PwC’s analysis, consumer price index (CPI) inflation will revert to the target range of 2% by the end of next year, while there is a chance that prices may continue to rise faster for food and services.

However, the research cautions that the UK’s recovery is trailing behind despite this improved outlook.

Gora Suri, economist at PwC, says:

“The key drivers of inflation have been energy, food and, to a lesser extent, supply chain disruption. While energy price inflation is starting to ease, food price inflation remains at a multi-decade high and this puts pressure on consumer spending, especially in the services sector. 

“So while the headline CPI rate will fall, prices will cumulatively be one fifth higher by the end of next year compared to the start of 2021. This will inevitably affect those on lower incomes, or who have seen smaller wage growth, significantly more than others and will have divergent impacts on consumer spending patterns in a highly polarised recovery.”

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