“The country's economy is on track to shrink less than expected this year and avoid the two quarters of negative growth which mark a technical recession,” the British Chambers of Commerce (BCC) forecast on Wednesday per Reuters.

Key findings

Gross Domestic Product (GDP) would fall by 0.3% this year, a smaller decline than its previous forecast of a 1.3% fall, after stronger activity at the end of 2022.

On a quarterly basis GDP is forecast to fall 0.3% in the first quarter of 2023, before showing zero growth in the second quarter and rising by 0.2% in each of the third and fourth quarters of 2023.

The BCC expects the economy to grow 0.6% next year, while the Bank of England (BoE) predicted a quarter percent contraction for 2024 last month.

Britain is the only Group of Seven economy that has yet to rebound to its pre-pandemic size and the BCC forecast it would not return to that level until the final quarter of 2024.

While consumers and businesses still face a hit from double-digit inflation, the BCC expects inflation to drop to 5% in the fourth quarter and 1.5% by late 2024.

The BCC expects BoE rates to be a quarter-point higher at the end of the year than they are now - taking rates to 4.25% - and then for rates to be cut to 3.5% by late 2024.

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