Research Briefing | Dec 2, 2022

Supply-side problems exacerbating economic difficulties in the UK

The MPC and OBR both judge that UK potential GDP has fallen outright since Q4 2019 and will register only meagre growth in the coming years. This theme of weak UK potential output growth is in line with Oxford Economics’ view – both our figures and OECD estimates imply that UK potential growth over 2020-2024 is likely to be among the lowest of any advanced economy.

What you will learn:

  • Weak UK potential output growth reflects adverse effects from Brexit, the pandemic, high energy prices, and demographics.
  • Low potential growth implies weak growth in living standards and painful choices for fiscal and monetary policymakers.
  • The government lacks a serious strategy to lift potential growth; in fact, the cuts to public investment in the Autumn Statement could make it worse.
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