The UK economy is showing signs of stress heading into 2024. While fears of a deep recession aren’t as high as they were, many are concerned that high inflation, a struggling labour market and political uncertainty could produce economic instability in the new year.
In this article, we’ll explore three factors that could shape the UK economy in 2024.
1. Inflation rates
The price of goods plays a crucial role in any economy and it’s been a key influence in 2022-23. This was caused largely by product and service shortages following the COVID pandemic and food and energy shortages after the Russian invasion of Ukraine, as well as shortages of workers in the labour market. Inflation has been easing towards the tail-end of 2023 thanks to the Bank of England raising interest rates and Ofgem energy price caps. Yet it remains higher than in many other western economies and it remains to be seen whether inflation will continue to calm down in 2024.
2. The labour market
The number of people employed in the UK is still below pre-pandemic amounts, despite the population being higher than before. Data from the Office for National Statistics also shows that the unemployment rate is currently 4.3% and it’s on an upward trend.
This is reportedly due to drops in the number of full-time self-employed workers in the country, as well as a sharp decline in the number of jobs available in the UK. Unemployment is damaging for both the economy and society, causing financial hardship and mental health issues unless the unemployed find alternative ways to make money like investing on trading platforms.
A healthy economy will be difficult unless the government does more to get people back to work.
3. Political uncertainty
The next general election should take place at the start of 2025, so we can expect significant excitement in UK politics throughout 2024.
The Labour Party has held a consistently large lead in the polls for more than a year now, so there’s a good chance that they could get into Downing Street. Furthermore, the current government will likely be trying to win votes against the backdrop of the economic struggles of recent years, which could significantly reduce the chances of it staying in power.
Although the Labour party has moved much more toward the center under its new leader, Sir Keir Starmer, and is no longer pushing radical left-wing policies such as imposing higher taxes on high earners and nationalising utilities, a Labour win would still involve big changes that could impact the economy.
Predicting the future is never easy, especially where the economy’s concerned. But if you keep an eye on the three factors discussed above, you should be well on your way to staying abreast of the UK economy in 2024.
