Economists warn: the UK economy is slowing down, and recessions will become more frequent.
Research indicates that the slowdown in the growth rate of the UK economy makes it more susceptible to growth shocks, and it may face more frequent episodes of technical recessions in the future.
Economists point out that the slowdown in the pace of economic growth in the UK makes it more vulnerable to growth shocks and may face more frequent technical recessions in the future. Analysis shows that the trend growth rate in the UK - the speed at which the economy can sustainably grow without pushing up inflation - has declined from an average of 2.5% per year between 1955 and 2009 to 1.2% in the coming years.
Research by the UK's chief economist Dan Hansen has found that since 1955, the economy has experienced enough shocks to trigger technical recessions (defined as two consecutive quarters of output contraction) on 15 occasions. According to current trends, future recessions may occur every five years, rather than the average once every eight years seen in the past.
This trend suggests that the outlook for the UK economy will remain bleak, and more frequent economic recessions will put greater pressure on government and Bank of England policymakers. UK Prime Minister Kyle Stammer had promised to increase the country's economic growth rate, but since the Labour Party came to power last July, the UK economy has slowed sharply.
Hansen notes, "There are good reasons to believe that technical recessions will be more frequent in the coming years. The UK's trend growth rate has declined, which means that shocks that previously led to slowing economic growth are now sufficient to cause output contractions." However, he also said that this is unlikely to result in severe economic downturns accompanied by soaring unemployment rates becoming more common.
Since the end of the pandemic, the UK economy has been performing poorly. In the second half of 2023, a slight recession occurred in the UK economy due to rising inflation and interest rates. In the third quarter of 2024, the UK Gross Domestic Product (GDP) remained stable, and the Bank of England expects zero growth in the fourth quarter.
Although the economy is expected to rebound in 2025, the continued slump in productivity will continue to hinder the economy's potential, and the growth rate will remain well below pre-financial crisis levels.
UK Chancellor of the Exchequer Rachel Reeves emphasized her commitment to driving economic development in an interview on Wednesday. She stated that the Labour Party is trying to remove investment barriers and noted that for major infrastructure projects and planning decisions, the answer cannot always be no.
She said, "This has always been a problem in the UK. When faced with choices between policies that promote economic development and other policies, the 'other policies' always win out."
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