Britain is heading towards a recession next year as borrowing costs stay elevated, the IFS warned in its latest Green Budget.
The UK economy is in a “horrible fiscal bind” as it heads for recession and with no room to cut taxes or increase public spending amid mounting political pressure on the Chancellor to do so, according to a report.
The price of our high levels of indebtedness, failure to stimulate growth, and high borrowing costs is likely to be a protracted period of high taxes and tight spending The UK is also expected to fall into a recession at the start of 2024 that lasts for nine months, according to analysis by Citi.It forecasts gross domestic product to fall by 0.7% over 2024 due to weak corporate margins and higher interest rates.
It comes despite growing pressure to improve services such as the NHS and commitments to spending in some areas such as defence and childcare. Benjamin Nabarro, chief UK economist at Citi, said: “With activity already beginning to slow, and the labour market also showing tentative signs of loosening, most of these effects still lie ahead.”
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