The UK is set for five years of lost economic growth, according to research from think tank the National Institute for Economic and Social Research (NIESR).
The NIESR said a ‘triple blow’ of Brexit, Covid and Russia’s invasion of Ukraine had ‘badly affected the economy’. It added that the spending power of workers in many parts of the UK will remain below pre-pandemic levels until the end of 2024.
Despite pay increases, high inflation has forced up prices and the rising cost of living has left households throughout the UK feeling squeezed.
The NIESR forecasts that inflation, the rate at which prices rise, will remain continually above the Bank of England’s 2% target until early 2025, meaning the cost of living will also continue to rise. Inflation is currently 7.9%.
Professor Stephen Millard, the NIESR’s Deputy Director for Macroeconomic Modelling and Forecasting, said: ‘The triple supply shocks of Brexit, Covid and the Russian invasion of Ukraine, together with the monetary tightening that has been necessary to bring inflation down, have badly affected the UK economy.
‘As a result, we expect stuttering growth over the next two years and GDP to only recover to its 2019 quarter four level in 2024 quarter three. The need to address the UK’s poor growth performance remains the key challenge facing policymakers as we approach the next election.’