Top accounting firm Ernst and Young dispute the Governor of the Bank of England’s assertion that while the coming recession may last longer than has been the norm over recent contractions, it will be shallower.

However, they still see the economy beginning to grow again from the middle of this year, which is earlier than Andrew Bailey has previously forecast. While the country will emerge from the recession, it will not see the level of growth it has seen in recent years. In 2023 the economy is expected to shrink overall by 0.7%, in 2024, 1.9% and in 2025 2.3%.

Overall, in 2022 the economy is expected to have grown by 2.3%.

The likelihood of a change of Government early in 2025 clouds the picture, but the Labour Party is unlikely to be able to have either the policies nor the wherewithal to change the outlook substantially, although it will have something of a free ride for a year being able to blame the previous Government for any problems it encounters.

One of the major contributors to the upturn expected in the second half of the year will be falling inflation. While the significant number of rate hikes that the Central Bank has put in place have begun to have an effect, it is only now that interest rates have entered a neutral phase and may turn restrictive as early next week that their effect will be magnified.

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