Economists have made a dramatic U-turn about Britain and are- now predicting an upswing for 2024, with the country recovering from 2023 ending in recession.
It has been forecast that inflation will recede, interest rates will fall, living standards will improve and investment will pick up.
The economy is expected to grow one percent by the start of 2025, according to the latest analysis by Dan Hanson, Bloomberg’s chief UK economist.
Hanson added that should optimism prompt UK households to spend some of their excess savings, it could go up by as much as 1.9 percent.
Bank of America strategist Kamal Sharma predicts the currency will surge to $1.37, which would be its highest level in over two years.
The pound has seen gains against all but two major currencies so far in 2024, and currently trades under $1.27. “The pound is the US dollar of Europe,” Sharma said.
WPP Plc chief executive Mark Read added: “We’ll all feel a little bit better about 2024 as the year goes on.”
British Land Co. CEO Simon Carter told Bloomberg he was “cautiously optimistic”, saying the Government has “made changes” by fixing Britain’s relationship with the EU and bringing taxes down, “that’s creating a more positive backdrop for investment”.
Growth in the economy of 1.9 percent would put the UK at the top of the G7 table, with Japan and Germany also finishing 2023 in a recession.
This is bolstered by the views of party leaders heading towards the general election, promising to focus on growth and maintain fiscal rules to get Britain out of its slump.
“As the respective leaders, I think you’ve got two very good individuals,” Lloyd’s of London chief executive John Neal said.
He added that Sunak has “the financial acumen, the attitude — he ticks all those boxes” and that Starmer’s Labour was “presenting themselves confidently,” more pro-business than the party has been since Tony Blair.
This comes after the UK’s reputation as a global investment destination plummeted last April. Microsoft Corp president Brad Smith said that the EU was a “more attractive place to start a business”.
His sentiments were echoed by carmaker Stellantis, UK manufacturer Dyson, and pharmaceutical giants Eli Lilly & Co and Astrazeneca.
National debt is at a high last seen in the 1960s, the tax burden is at a 70-year peak and debt-servicing costs are at 1949 levels.
Living standards have also barely improved since 2010, with average weekly earnings after adjusting for inflation just two percent higher today.
“This is the worst inheritance any incoming government has had since the Second World War,” Labour’s Chancellor-in-waiting and former Bank of England economist, Rachel Reeves, said last week.
