The outlook for the British economy is better than expected

The outlookgdpBy Gavin Jackson for Britain was bleak at the start of 2023. The country was on its fourth prime minister in four years, after the brief rule of Liz Truss ended in financial turmoil. Even that political instability was a minor worry for many Britons, given high energy prices, rising interest rates and falling wages. Yet in the end, the worst that could be said for Britain’s economy in 2023 was that it went sideways. Growth was minimal— increased by around 0.5%—but stagnation, not disaster, was the outcome.Can Britain expect to do better in 2024? Many of the challenges of the past year have faded. The cost of natural gas has fallen sharply, a big cause of the fall in inflation from 10% in December 2022 to a forecast 4.5% in the same month of 2023. Continued strength in the labour market means wages are now growing in real terms. The Bank of England has either finished raising interest rates—from 0.25% in 2022 to 5.25% in July—or will do so soon.