Wednesday, October 5, 2022
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Citi: UK economic outlook deteriorates

By Scott Kanowsky

Investing.com — Britain’s economic outlook is deteriorating, but a slew of potential policy measures under Prime Minister Liz Truss will help limit losses, analysts at Citi

In a report on Tuesday, a research team at the bank said they expected Britain to slip into recession in the autumn, with already high inflation surging further.

However, Truss’ proposed £B fiscal plan, which includes energy price caps and tax cuts, will likely bring the economy down to -1 to -1.5 percentile range.

Meanwhile, the UK’s consumer price index – a key measure of national inflation – is expected to reach

Peak .7% in January. Citi warned that without policy changes, the CPI could climb to a high of 17.4%. Price growth is also expected to return to the Bank of England’s 2% target in the second half 2024.

Citi added that the new policy is likely to be funded through the purchase of UK sovereign debt, which will put upward pressure on bond yields, adding to sterling exert downward pressure.

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