Economic outlook for 2024

Being able to predict the performance of the UK’s economy and markets in 2024 will be incredibly difficult – as it has been since 2016. Economists and businesses traditionally use metrics to plan ahead to gauge rates of inflation, growth and market performance. However, 2024 is unusual due to the number of national elections taking place and the nature of the countries participating.

At least 64 countries plus the European Union, together representing around 49% of the global population, will be holding national elections this year – including the UK’s key trading partners.

Potentially most significant is the United States, being the UK’s closest ally, but elections in India and the EU will have a tremendous impact on international economic policies and markets. The outcome of those elections will have a dramatic impact on the UK’s economic prospects with protectionist policies an obvious cause for concern for UK exporters and manufacturers.

However, the disappointment of the UK’s lack of economic growth is contrasted with the news that inflation has declined. The end of 2023 saw the UK entering a short recession in the last quarter and the signs were that the UK economy would continue to be overshadowed by western allies.

Nevertheless, the UK’s fall in inflation could result in finance being more readily available for companies seeking to undertake acquisitions, sales and investments during the course of 2024, something that would fuel economic growth. This optimism has been overshadowed by a high rate of construction firms entering administration and an absence of a skilled labour market, something recently highlighted by Sir James Dyson. Both factors make it difficult for UK markets to return to the economic prosperity experienced between 1992 and 2008.

Forecasting markets trends is incredibly challenging and the UK’s economy clearly requires something significant to change to obtain the level of growth businesses, politicians and consumers desire.

The insolvency statistics for England and Wales reported 20,577 creditor’s voluntary liquidations in 2023, the highest annual number since records began in 1960. The total company insolvencies in the last quarter of 2023 increased by 9% from the previous quarter. One in 186 active companies entered insolvent liquidation during 2023, an increase of 49% from 2022. This presents an overall picture of increasing distress in business generally.

The continued, if steady, fall in inflation is cause for optimism – yet the unknown factor remains how this year of national elections will impact the UK’s economic prosperity.