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![]() ![]() Prior to the 2008 global financial crisis, the UK had been a strong performer among the Group of Seven countries. Ambitious reforms are needed to bolster the UK’s productive potential. But, as we discuss in our regular review of the UK economy, the country also faces structural challenges, notably weak potential growth, currently estimated at about 1.5 percent. ![]() The authorities have rightly tightened monetary policy, most recently with a 50-basis-point rise in interest rates in June, and fiscal policy in the fight against inflation. The terms of trade shock, amid historically tight labor markets, has also pushed inflation to record levels.īringing down inflation is a prerequisite for lasting stability and growth. The energy price shock due to Russia’s war in Ukraine has disrupted the recovery, with growth projected at a modest 0.4 percent in 2023 and 1 percent in 2024. Reforms could bolster productive potential and ensure the country remains a global innovation leaderĪlthough the United Kingdom is expected to avoid a recession this year, the country faces a challenging economic outlook. ![]()
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