PwC has released its economic outlook for 2024 predicting a more rosy view on the economy in 2024 as the UK turns a page from the difficult post-pandemic years. 

Commenting on this, PwC chief economist, Barret Kupelian, said: “Following the post-pandemic challenges, 2024 will be the year the UK turns a page. Inflation returning closer to normal levels, progress on regional growth and real incomes improving  provides optimism for the year ahead, despite the legacy of higher consumer prices and rising housing costs. There remain many ‘known unknowns’ in 2024 that can change the trajectory of the UK, such as volatility in global energy prices due to the continued middle eastern conflict and the forthcoming General Election, however, overall the outlook is far rosier for 2024 than expected twelve months ago. 

“2024 will also be a major year for sport to look forward to with the Euro football tournament, T20 Cricket World Cup and, of course, the Olympic Games in Paris. Our modelling indicates that Team GB will build upon its strong performance since London 2012 as it climbs to third place in the total medal tally.”   

The good 

  • The UK will be the fourth best performing G7 economy relative to pre-pandemic levels: Despite weak projected growth in 2024, the UK will still outperform France, Japan and Germany with real GDP around 2.7% higher in 2024 on average relative to 2019 levels. 
  • Northern Ireland, Wales and Scotland will be three of fastest growing regions: Northern Ireland and Wales will grow by 0.8% and Scotland by 0.6% in 2024, putting them in the top five fastest growing regions in the UK, alongside Greater London (0.7%) and the North West (0.7%), providing a boost to the levelling up agenda.
  • Low income households will see an improvement to their living standards: Improving economic conditions, including the National Living Wage (NLW) increase to £11.44 from April, easing energy and food inflation throughout 2024, and increased government support via a housing benefit increase and a third cost of living payment will boost the real incomes of lower income families.  
  • Headline inflation will come close to hitting the Bank of England’s 2% inflation target: Despite a potential uptick in inflationary pressure in the first quarter of 2024, headline inflation will fall much faster in 2024 than the Bank anticipated, getting close to the 2% target. This is largely owing to falls in global energy prices, though there remains considerable volatility.  
  • Consumer sentiment to turn a corner: For the first time since 2021, more households will expect to be better off in twelve months time than worse off, as inflation falls back materially.
  • Public EV charging points in the UK will reach 100 per 100,000 people: There will be continuing progress in the UK’s rollout of EV charging points, more than twice as much as in the US  and closer to the EU average of 106 by the end of 2024. This milestone marks the substantial progress made since the pandemic, with the average at 27 per 100,000 people in April 2020. 

The bad 

  • Consumer prices will remain higher: Despite falls to headline inflation, consumer prices will still be around a quarter higher than in early 2021. So consumers will continue to readjust their spending based on their priorities and preferences.
  • Average rents in London will continue to climb: London rents will average more than £2,000 per month by the end of the year for the first time, a 20% rise compared to March 2020. As a result, rents in London will be around three times higher than in the North East on average. The rest of the UK will also see a continued rise in rents with an average increase of over 5% in 2024.
  • Corporate insolvencies will climb: There will be a significant rise in corporate insolvencies in 2024, just shy of 30,000 with smaller businesses accounting for the lion’s share. The industries most impacted are likely to be hotels & catering, manufacturing, and transport & storage. While the IT and real estate sectors could be impacted to a lesser extent.

The optimistic 

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By GlobalData
  • Team GB will win the third most medals at the Paris Olympics: Our econometric modelling indicates it will be a good year for British sports, with Team GB improving on its fourth place finish at the Tokyo Olympic games. The USA will achieve the highest medal share with China coming second.  
  • The housing market will prove more resilient than expected: House prices will only decline by 2% in 2024, less than expected, remaining one-fifth above pre-pandemic levels.