April 25, 2024

Surging wages to pull Britain out of recession, say economists

Mr Tombs said this will aid spending and prompt the return of economic growth after GDP shrank by 0.3pc in the final three months of 2023, which tipped the country into recession.

However, the downturn could soon be over as Mr Tombs expects the economy to grow by 0.3pc in the first quarter of 2024.

He said: “Mortgage rates are down from their peaks, unemployment remains very low and house prices – often an indicator of consumer sentiment – are rising again.

“Many households also have recently replenished the rainy day funds they depleted in 2022.”

Ian Stewart, chief economist at Deloitte, said there is an “irony” that last week’s recession came just as “the economic outlook seems to have brightened”.

He said: “Inflation is on a downward trajectory; real earnings are rising and mortgage rates have fallen back.

“Newly revised data show that, remarkably, unemployment fell through the second half of last year just as the economy moved into recession. Consumer and business confidence have risen in recent months signalling that many feel the worst is past.

“We see growth coming back in the summer months and the economy expanding in the second half of this year. That would constitute a very mild recession.”

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