The National Institute of Economic and Social Research (Niesr) predicts that the UK is likely to avoid a recession this year. It expects the economy to grow marginally, despite high prices hitting household budgets. However, it warned while the UK may not fall into recession, it will feel like one for at least seven million households.
Niesr predicts the economy will grow by just 0.2% this year, and 1% in 2024. The forecast paints a slightly more optimistic picture than others, such as the Bank of England's. However, Niesr warned that the rising cost of living meant it would still feel like a recession for millions, particularly in the North East of England and parts of Scotland, Wales and Northern Ireland.
Inflation, the rate at which prices rise, has been hitting household budgets as energy and food costs soar. Niesr said one in four UK households - some seven million families - would be unable to fully cover their and food and energy bills in the 2023-24 financial year, up from around one in five in 2022-23.
The Bank of England said last week that the UK is set to enter recession this year, but the downturn would shorter and less severe than previously expected. It predicts the slump will now last just over a year rather than almost two.
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