UK Economic Outlook July 2024
In the latest edition of PwC’s UK Economic Outlook, we explore how viable the aim of ‘highest sustained growth in the G7’ is and whether the UK’s long-term structural issues can be overcome.
Uncertainty was an overarching theme of 2022 overshadowing many of our predictions. So what lies ahead? Here, our economists outline what may be in store for people, businesses and society.
Our key predictions for 2023
Falling real wages and rising food prices could leave the average British household feeling the pinch in 2023. We look at how this could affect the population - from happiness levels to divorce rates. But there are some positive notes amid the tough conditions as we predict more than 300,000 Britains will rejoin the labour market in 2023. And new immigrants will directly contribute £19bn to the UK economy. Not only that but we believe that the England’s women's football team stands a decent chance to finally bring home the World Cup.
1. French workers will overtake British workers as the fourth-best paid workers in the G7, as British real wages fall back to their 2006 levels
After five decades of positive real wage growth, UK real wages are expected to take a hit. As a result, French workers could overtake their British counterparts as the fourth-best paid workers in the G7.
2. The weekly food shop will cost the average household around £100 – more than twice as much as it cost at the start of the century
As a result of rising food inflation, the weekly shopping bill could cost the average household around £100 by 2023-24, double the rate at the turn of the century. This will be particularly difficult for low income households who spend proportionately more on food than higher income households.
3. UK house prices will decline by around 8% in 2023 – the second sharpest annual decline in house prices over the past seventy years
House prices are expected to fall next year as higher interest rates and cost of living affect the sector. House price decline is very rare for the UK economy and this will be the second sharpest annual fall in 70 years.
4. More than three-hundred thousand British workers will rejoin the UK labour market in 2023
The UK labour market has suffered from high levels of economic inactivity in 2022. However, we expect that more than 300,000 UK workers could rejoin the labor market in 2023, potentially closing the UK’s economic inactivity gap with the US. This should help to reduce staff shortages in highly skilled sectors.
5. New immigrants will directly contribute £19bn to the UK economy, driving 1% of GDP growth even as the economy contracts
Following an uptick in 2022 from loosening covid restrictions and targeted schemes for Ukrainians, Afghans and Hong Kong SAR residents, we expect that immigration to the UK will contribute between £19bn to £30bn to real GDP in 2023.
To read the rest of our 10 key trends, download the report and explore them in more detail.
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