UK to avoid recession, but growth will remain sluggish

Despite this, growth is forecast to remain sluggish by historical standards. Additionally, while inflation is going to decline, the pace of moderation is going to be slower than previously thought – which will likely necessitate further interest rate increases.  

This likely high interest rate environment will depress business investment and result in more corporate insolvencies.

Overall, while the revisions made by its analysts have slightly improved, risks remain skewed to the downside with ongoing fragilities potentially yet to be fully uncovered.  

KPMG UK chief economist Yael Selfin said: “We’ve seen a slightly stronger momentum for the UK economy but risks are still elevated on the downside. A stickier inflation will see monetary policy tightening even further, increasing the risk of unwelcome side effects among other potential headwinds.”