This year the UK economy will grow by just 1.1%, according to the research centre’s predictions – far lower than the official forecast of 2.1%.
The gloomy estimate comes as a result of high inflation, which is expected to continue rising this year. The CEBR says the VAT rise, which was planned before harvest failures boosted food and cotton prices, will help keep inflation up while adding to the squeeze in disposable income. It estimates that inflation could rise to about 4% this year. (Although the same won’t apply to wages, of course).