UK economy 'will shrink for two years as eurozone and US grow'

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The UK economy will shrink this year and in 2024, according to a report by a leading US thinktank that said stubborn inflation and a shortage of workers would damage the prospects for growth more than most analysts expect.

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27 Sep 2023

The Washington-based Peterson Institute for International Economics (PIIE) said a drop in GDP this year of 0.3% would be followed by a fall of 0.2% next year while the eurozone and the US were on course for growth this year and next.

Ahead of revised forecasts by the International Monetary Fund in a fortnight, which are expected to show the UK expanding this year and staging a modest recovery in 2024, the PIIE president, Adam Posen, said he was gloomy about the UK’s prospects.

Posen, who spent three years on the Bank of England’s monetary policy committee, said factors related to the underlying weakness of the UK economy and the fallout from Brexit would leave the UK behind while most other developed economies expanded. He said the UK was also suffering from an unequal recovery that benefited better-off households while the