That leaves the economy on track for a contraction of 1.4% in 2023, compared to 0.5% growth predicted in early September.
Counting the Cost of Truss
“Both monetary and fiscal policy are set to be tightened in unison as the UK attempts to regain credibility with financial markets,” economists Dan Hanson, Jamie Rush, and Ana Andrade wrote in their report. “The result looks likely to be a recession similar to the one experienced in the 1990s.”
Peak pain will be in the second quarter of next year, they said. At that point Truss’s failed plan is likely to have reduced GDP by 1.5%.
Adding to the strain, Bloomberg Economics sees inflation spiking to 12% in April, forcing the Bank of England to hike its key interest rate to a peak of 4.25% by next May from 2.25% now.
More stories like this are available on bloomberg.com
Truss’s flop carries price tag for UK economy
Prime Minister Liz Truss’s brief time in office will carry a sizable price tag for the UK economy, according to Bloomberg Economics.
Gross domestic product is likely to be about 2% smaller next year relative to the forecast before her government unveiled controversial tax cuts on Sept. 23, new projections released on Monday show.
That leaves the economy on track for a contraction of 1.4% in 2023, compared to 0.5% growth predicted in early September.
Counting the Cost of Truss
“Both monetary and fiscal policy are set to be tightened in unison as the UK attempts to regain credibility with financial markets,” economists Dan Hanson, Jamie Rush, and Ana Andrade wrote in their report. “The result looks likely to be a recession similar to the one experienced in the 1990s.”
Peak pain will be in the second quarter of next year, they said. At that point Truss’s failed plan is likely to have reduced GDP by 1.5%.
Adding to the strain, Bloomberg Economics sees inflation spiking to 12% in April, forcing the Bank of England to hike its key interest rate to a peak of 4.25% by next May from 2.25% now.
More stories like this are available on bloomberg.com