In 2024, UK household incomes are expected to improve significantly, marking a potential "turning point" for the nation's stable economy. This positive outlook is driven by anticipated interest rate cuts, tax reductions, and decreasing inflation, as reported recently.
Outlook for UK Growth in 2024
Ernst & Young's Item Club has revised its outlook for UK economic growth in the current year, increasing it from 0.7% to 0.9%, as compared to the previous forecast made in October.
According to EY's latest economic forecast, there is an anticipated growth acceleration in the coming year, with a potential surge in Gross Domestic Product (GDP) to 1.8%, compared to the previously expected 1.7%.
" Falling inflation and declining market interest rates, coupled with the potential for additional tax cuts in the Chancellor’s spring Budget, suggest the UK is at a turning point in 2024 and about to enter a more positive phase of growth," emphasized Hywell Ball, EY UK chairman.
However, the growth prediction for the overall GDP outcome in 2023 has deteriorated, with the group revising its optimistic expectation of a 0.6% GDP expansion down to 0.3%.
This concern arises amidst fears that the UK may have slipped into a recession during the final quarter of 2023, as indicated by two or more consecutive quarters of negative economic growth. This follows a decline in the third quarter and fragile economic indicators in the last months of the previous year.
What about Household Income ?
Household incomes are expected to increase, as Consumer Price Index (CPI) inflation is projected to decrease to the Bank of England's target rate of 2% by May, as reported by EY.
The inflation rate is anticipated to average around 2.4% for the remainder of 2024, a decrease from the 2.8% predicted in the economic autumn forecast. This positive outlook for inflation is expected to lead to a significant reduction in the bank rate for the current year.