UK Economic Snapshot March 2024

Monthly economic snapshot produced by the Foresight Factory for the IPA Commercial Group.

Oxford Economics has raised its 2024 and 2025 GDP forecasts. Growth of 0.5% is now predicted for 2024, up from 0.4% last month. The revision is largely due to the recent Budget’s cut to National Insurance Contributions (NICs), which should provide a modest but short-term boost to household spending power. The easing of inflationary pressures and a gradual loosening of monetary policy will also contribute to growth. However, it’s important to note that even 0.5% of growth would be weak by historical standards.


Economic Growth

The economy shrank in both the third and fourth quarters of 2023, by 0.1% and 0.3% respectively, meeting the definition of a technical recession. However, OE believes the downturn will be shortlived, pointing to more positive indicators that have emerged since the start of the year. GDP rose by 0.2% month-on-month in January, retail sales have bounced back from lows in December and business surveys point to a rise in investment and sentiment.


According to the ONS, the largest downward contributions to monthly change in annual CPI inflation rates came from food, and cafes/restaurants. The largest upward contributions came from housing and household services, and motor fuels. The pace of annual food price hikes has eased recently, falling from a 19.2% peak in March 2023 (the highest in over 45 years) to 5% in February.


According to the ONS’s Labour Force Survey, unemployment was 3.9% in the three months to January, up from 3.8% in the previous three-month period. Of particular note, historically high numbers of people are reporting that they are long-term sick.


From November to January, average total earnings grew by 5.6% and regular earnings (excluding bonuses) by 6.1%. After inflation, total earnings rose by 1.4% in the three months until December.

Key Drivers of the Short-term Outlook

  1. Inflation will fall sharply.
  2. The Bank Rate is expected to fall to 4.5% by the end of the year.
  3. The impact of tighter monetary policy is still emerging.
  4. Tighter fiscal policy is to be expected.
  5. A limited house price correction.

What to Watch Out For

  1. The impact of the Israel-Hamas war
  2. Changes to fiscal approach
  3. Corporate insolvencies
  4. Consumers spending their pandemic savings
See previous UK Economic Snapshots


Produced by the Foresight Factory for the IPA Commercial Group

Foresight Factory