According to analysts at insurer Allianz Trade, Britain is on track to experience the world’s deepest recession. The UK economy is expected to contract by 0.9 percent in 2023, while business insolvencies will increase by 15%.
Germany’s economy will contract by 0.7 percent, France’s economy will contract by 0.4 percent, and the US economy will contract by 0.3 percent.
The study also warned that companies in the United Kingdom and Europe will face a “massive profitability shock” because the cost of rising energy bills will not be fully offset by government assistance.
The UK is forecast to be hit hardest out of all the G7 economies, with London School of Economies professor Ricardo Reis blaming “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”.
Despite the fact that 2024 is expected to be a better year, Britain will still struggle to recover due to fundamental policy “mistakes” caused by factors such as low investment and the impact of Brexit.
Professor Diane Coyle of Cambridge University believes that improving relations with the EU is critical to raising living standards in the United Kingdom.