The UK Economy

Abstract

• More than four years after the start of the recession, the economy is well over 4 per cent below its pre-crisis peak. This persistent weakness is unprecedented.

• Growth this year will be close to zero, but about 2 per cent in 2013. This is essentially unchanged from our January forecast.

• Although our inflation forecast has increased, largely as a result of the increase in oil prices, we still expect it to fall below target by the end of the year

• We expect the cyclically adjusted current budget to be in slight surplus in 2016–17.

• We expect the unemployment rate to rise to almost 9 per cent at the end of this year, and to remain elevated throughout the forecast period. This will do permanent damage to the UK's productive capacity.