- Bank of England and OBR’s forecasts offer different projections for the year ahead
- This raises an important question - how useful are they?
As the year draws to a close, thoughts turn to what 2023 has in store for the UK economy. We should have pretty good visibility: after all, both the Bank of England (BoE) and the Office for Budget Responsibility (OBR) treated us to expansive projections in November. The problem is that they both offer different visions of what lies ahead.
Take growth. There is, at least, some consensus that the combined forces of high inflation, rising interest rates and falling house prices will weigh on consumption next year, causing the economy to contract. But the Bank and the OBR do not agree on the magnitude of the recession ahead. While the OBR forecasts a recession lasting until the end of next year, the BoE expects a longer contraction, with the economy only returning to growth in Q3 of 2024. Depending on which you believe, the UK could be facing the longest recession since records began, or something altogether milder.