It will be a difficult year ahead for everyone already struggling with the cost of living crisis (Picture: Metro.co.uk)
It is looking like a bleak year ahead with the country set to face the worst recession out of all major world economies.
Analysts at insurer Allianz Trade predict the UK economy will shrink by 0.9%, as the country is battered by rising energy bills, high interest rates and an increase in failing businesses.
This compares with a 0.7% decline in Germany, a 0.4% slump in France and a 0.3% fall in the US.
Firms across the UK and Europe are set to suffer a ‘massive profitability shock’ from rising energy bills, which would not be offset by government support.
Business insolvencies in the UK would rise by 15% in 2023 to 27,100, as firms buckle under the weight of higher costs.
Meanwhile, inflation is expected to stay ‘uncomfortably high’ but in somewhat better news the annual pace of price rises will decrease to 7.5%, compared with 9% last year.
Overall the global economy is ‘still heading towards a recession’, with Allianz predicting worldwide growth of just 1.4% – down from 2.9% last year – before rebounding to 2.8% in 2024.
Maxime Darmet, senior economist at Allianz Trade, said global trade would ‘continue to slow’.
The IMF also predicts a third of the world economy will be in recession this year (Picture: HowesImages/SplashNews)
This is because the manufacturing sector will be hit hard by lower demand and some companies trying to lower their stock levels due to oversupply.
These findings from Allianz echo similar warnings, which come from the International Monetary Fund (IMF).
Managing director Kristalina Georgieva predicts a third of the world economy will be in recession this year.
She warned the US, EU and Chinese economies were all slowing and the Covid-19 outbreak in China would slow economic activity across the globe.
The IMF cut its 2023 outlook for growth in October – saying the war in Ukraine, inflation and rising interest rates would impact the world economy.
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The forecast is looking bleak for the year ahead.