JPMorgan becomes first bank to predict UK will avoid recession

JPMORGAN Chase & Co has become the first City of London forecaster to predict that Britain will stay out of recession in 2023 after a slew of more resilient growth signals in recent weeks.

The US bank delivered big upgrades to its UK growth projections after a resurgence in consumer confidence and a surprise return to growth territory in the latest purchasing managers’ index (PMI). While the National Institute of Economic and Social Research also expects no recession, JPMorgan is alone among banks in making that the central forecast, according to a Bloomberg survey.

The UK economy was expected to lag behind the US and eurozone in 2023. But forecasters are turning more positive as political turmoil cools and falling natural gas prices ease the pressure on households and businesses.

“This week’s strong PMI report and strong gain in consumer confidence further challenge the Bank of England’s view that a recession, accompanied by a rise in the unemployment rate, is underway,” said Allan Monks, UK economist at JP Morgan, in a note.

JPMorgan had predicted a technical recession in the first half of 2023, forecasting a 0.3 per cent fall in GDP in the first quarter and a 0.2 per cent drop in the second quarter on an annualised basis. It now expects growth of 0.5 per cent and 0.6 per cent respectively.

Earlier this month, Niesr said one-in-four UK households will be unable to pay their energy and food bills, but that the economy will narrowly escape a recession in 2023. Last week, Citigroup said UK inflation will fall back to the Bank of England’s 2 per cent target this year, much earlier than most forecasters expect. BLOOMBERG