In our main scenario, we expect the economy to grow below 1% this year and the next. We estimate the real economy has only felt around half of the impact from the interest rate rises so far relative to a situation where the Bank did not act. So although we avoided recession, there are still some significant headwinds to economic activity.
On headline inflation, our modelling indicates that we are likely to close this calendar year with inflation under 5%, which bar any surprises means the government hits its target to halve inflation. Even so, inflation will have left its mark on households, businesses and the government. For households, we are expecting real earnings to be lower this year than where they were in 2006.
Finally, our special article evaluates the financial and non-financial benefits to higher education. We find that most undergraduate degrees have a positive impact on earnings and wellbeing.
In this article, we provide our latest expectations on the outlook for the UK economy, spotlighting growth, inflation and the labour market.
Our special article evaluates the earning and wellbeing effects of studying an undergraduate degree in the UK.
