Barret Kupelian, Chief Economist

Transcript

The UK economic outlook has gradually improved in the past few months, as headline inflation turned a corner and the UK avoided a recession. Here are three key points from our UK economic outlook report:

First, in our main scenario, we expect the economy to grow below 1% this year and the next. The primary reason for this is monetary policy. In fact, we estimate the real economy has only felt around half of the impact from tighter financial conditions relative to a situation where the Bank did not act at all. So although we avoided recession, there is more pain to come.

Second, on headline inflation, our modelling indicates that we are likely to close this calendar year with headline inflation at just under 5%, which bar any surprises means the government hits its target to halve inflation. Even so, inflation will have left its mark on businesses, the government and households. For example, for households, we expect to close this year with real earnings lower than where they were in 2006.

And finally, our special focus article on higher education in the UK shows that attending university generally has a positive impact on earnings and wellbeing. STEM courses deliver the highest earning premiums relative to other courses. But it tends to be more vocational courses such as Nursing that have the largest effect on life satisfaction and life worth.

For more details, download the report at the link below www.pwc.co.uk/ukeo