The 0.3% q/q contraction in Q3 left real GDP 0.8% below its Q4 2019 pre-virus level and the UK economy lagging even further behind its major counterparts. In contrast, GDP has risen above its pre-pandemic level in all G7 economies, including the US (4.4%) and the euro-zone (2.2%). This relative underperformance is likely to continue in 2023. We continue to be more pessimistic than most in expecting the UK economy to endure a recession involving a peak-to-trough fall in real GDP of 2.0%. That compares to the 1.0% decline in the euro-zone and 0.5% drop in the US that we expect. As a result, we expect the UK to be the only G7 economy that is still smaller than before the pandemic by the end of 2024.
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