Welcome to the first edition of The Current Account for 2024! This month's headlines explore the possibility of a recession in the UK in 2024 and Consumer Duty.
As we head into 2024 the macro-economic picture for the year ahead is on everyone’s minds. Will the UK head into recession this year?
- The Bank of England has warned that UK interest rates will remain at their 15-year highs for some time to come in order to bring inflation sustainably back to the 2% target. Sarah Breeden, the new deputy head of the BoE stated that the BoE’s “job isn’t done” yet when it comes to returning inflation to target levels.
- In signs that the inflation-easing measures taken by the BoE over the past couple of years are finally taking effect, the UK’s inflation rate fell much more than expected to 3.9% in November, its lowest level since September 2021.
- In December, UK grocery price inflation, one of the most affected areas, fell by the fastest rate on record. However geo-political tensions could potentially disrupt this trend with Houthi attacks on the red sea shipping routes putting pressure on freights costs and oil prices.
- Inflation in the US and Eurozone also came down, with financial markets expecting the first Federal Reserve rate cut to take place in March. The US and Eurozone also avoided a recession in 2023, with growth in America being significantly better than Europe.
- As financial analysts take all this data into consideration, they will need to predict whether or not the UK is in danger of slipping into recession in 2024. The general consensus amongst economists is that the UK economy will probably avoid a recession in 2024. 52 economists surveyed by Bloomberg believe the Treasury and the Bank of England will engineer a soft landing for the economy next year, with growth of 0.3% and a recession averted. However economic readings signal Britain will join Germany at the bottom of the Group of Seven growth table, echoing the anaemic growth predicted by the team at PEN.