‘Limping’ UK economy ‘needs to get mojo back’, says economists Business

Britain’s economy is “limping with a sprained ankle”, according to a report by economists, who expect growth to stay at around 0.5pc next year.

The UK’s gross domestic product will be better than expected this year at 0.5pc, according to the latest KPMG Global Economic Outlook, thanks to falling energy prices. It had predicted a 1pc contraction.

However, growth will be limited to 1pc in 2025 as households feel the impact of higher interest rates and inflation remains above the Bank of England’s 2pc target.

The report said that “around a half of the direct impact of monetary policy on mortgage holders is still to come, which would put downward pressure on housing activity and consumption”.

Around 1.5m fixed-rate mortgages are set to expire in 2024, compared to 1.6m in 2023 and 1.2m in 2022, meaning more households will be exposed to the impact of interest rates, which stand at 15-year highs of 5.25pc.

Yael Selfin, chief economist at KPMG UK, said: “While the UK economy is resilient, it needs to get its mojo back. 

“We expect monetary and fiscal policies to act as a headwind to growth over the next two years, and a sudden revival in productivity is not likely to come to the rescue. 

“This means that even the expected continuation of positive growth should not be celebrated prematurely, as the outlook is dominated by downside risks.”

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