Skip to main content

Softer landing, but the runway is longer

With higher interest rates taking longer to percolate through the economy, we now think the recession will be shallower and GDP growth will stay weak throughout all of 2024. It’s a softer landing for the economy, but the runway is longer. And because the restraints on supply are unlikely to fade quickly, price pressures in the UK will take longer to ease than elsewhere. That’s why we believe the Bank of England won’t cut interest rates from 5.25% until late in 2024. That would be later than the Fed, the ECB and current market pricing of mid-2024. But a stagnant economy in 2024 will lay the groundwork for a more marked easing in price pressures in 2025 and more significant interest rate cuts. Our forecast that rates will be cut to 3.00% in 2025 is lower than the cuts to 4.00% priced into the markets.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access