Is the UK economy no longer in recession?

The Confederation of British Industry (CBI) said on June 12 that the British economy could avoid recession this year, but deep-seated problems such as weak business investment will persist.

The UK economy could avoid recession this year. (Source: Getty Images)

The UK economy is on track to grow by 0.4% this year and 1.8% next year, according to the CBI, which is more optimistic than its previous forecast.

The federation said falling energy prices, supply chain disruptions and the reopening of China's economy after Covid-19 restrictions were the main reasons for the CBI's forecast upgrade.

However, CBI chief economist Alpesh Paleja noted that there was no denying the fact that this year would be another difficult one for both businesses and households, with the Bank of England (BoE) expected to raise interest rates from the current 4.5% to a peak of 5% in August.

“What is worrying is that the UK economy is underperforming in many key areas such as business investment and trade,” he stressed.

Business investment, the weak spot of the UK economy since the 2016 Brexit vote, will not return to pre-pandemic levels before the end of next year, the CBI said.

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