The UK is suffering at the hands of the “outright incompetence” of government ministers, leading economists have said.
The Organisation for Economic Co-operation and Development (OECD) forecasted that Britain will rank bottom of the growth league table for major economies for the next two years in succession.
Britain’s prospects were sharply downgraded by the intergovernmental think tank, which forecast GDP will shrink by 0.4 per cent in 2023 and grow by just 0.2 per cent in 2024. As recently as September, it was expecting the UK economy to flatline next year.
The Financial Times’ annual survey of leading economists also revealed that the UK will face one of the worst recessions and slowest recoveries in the G7.
More than four-fifths of the UK-based economists surveyed expected Britain to lag behind its peers in 2023, with a “significant minority” saying the country was “suffering from ministers’ outright incompetence.”
“The 2023 recession will feel much worse than the economic impact of the pandemic,” said John Philpott, an independent labour market economist while others described the outlook for consumers as “tough”, “bleak”, “grim”, “terrible”.
While the UK was not alone in facing the recession, the economists warned that Britain faced unique issues. Firstly, because the UK is unusually exposed to the global surge in energy prices and interest rates — with a reliance on gas that is not matched by storage capacity.
Secondly, the UK faces unique labour shortages in that its workforce has shrunk unusually since the pandemic.
Charlie Bean, a former Bank of England chief economist, said high inflation was likely to be more persistent in the UK than elsewhere because its labour market was “unsustainably tight even in the absence of the Ukraine shock”.
Anna Leach, deputy chief economist at the CBI, said this would “continue to apply a brake to growth for companies, drive industrial unrest and push up domestically-generated inflation”.
“The UK suffers from an energy shock as bad as Europe’s, an inflation problem . . . as bad as the US and a unique problem of lack of labour supply from the combination of Brexit and the NHS crisis,” said Ricardo Reis, a professor at the London School of Economics.
It comes as the first set of strikes have already begun in the UK with rail workers taking action across the country as workers are set to return to their offices.
Rail union boss Mick Lynch accused transport secretary Mark Harper of “not telling the truth” about the negotiations aimed at ending train strikes, as five days of fresh industrial action begins.
The Tory cabinet minister denied claims by the Rail, Maritime and Transport union (RMT) leader that the government had blocked a deal before Christmas – insisting it “absolutely isn’t true”.
But Mr Lynch said Mr Harper’s department had intervened by inserting “eight or nine” conditions – including driver-only trains – to thwart a settlement over pay and conditions.
Told that the transport secretary denied the claim, the RMT leader told Sky News: “Well he’s not telling you the truth … He can deny it all he likes – it doesn’t mean it’s not true.”
Mr Lynch said: “We were making progress with the train operating companies, and then on one Sunday afternoon before strike action they decided to torpedo talks by putting conditions on the negotiations that they knew we could never accept.”