The UK economy is forecast to grow at double the rate expected earlier this year, according to consultancy firm KPMG.
The forecast for the rise in Gross Domestic Product (GDP) for 2023 is now 1%, an increase from the prior prediction of 0.5%. Additionally, the growth rate for the following year is expected to be 1.2%, a revision from the initial 0.9% prediction. KPMG stated that the UK base rate is anticipated to decrease to 3.5% by 2025 from its present 5%, despite the Bank of England’s gradual lowering of interest rates.
Yael Selfin, KPMG UK’s chief economist, stressed that Chancellor Rachel Reeves must seize the upcoming autumn budget as an opportunity to drive stronger growth through increased public investment. Reeves has already stated that there will be no return to austerity under her watch, hinting at plans for increased capital spending and a rise in real public spending.
Although the prospect of improved growth is heartening, KPMG has pointed out possible challenges, such as a consumer base that’s become more cautious due to recent economic disruptions including the Covid-19 pandemic and energy crisis. Consumer spending is predicted to increase by a mere 0.4% this year and 1.4% the following year, with a lot of households choosing to save rather than spend.
At the Labour Party conference, Reeves acknowledged the challenge of addressing a £22 billion deficit left by the Conservatives. She noted that the upcoming budget on October 30 would necessitate “difficult decisions”.
