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The UK recession will be almost as deep as Russia, but are economic prospects in 2023 better than we think?
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The UK recession will be almost as deep as Russia, but are economic prospects in 2023 better than we think?

Welcome to our #145 weekly newsletter.

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-Jana Hlistova


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Happy New Year! And it’s good to be back.

In this week’s newsletter, we focus on the economic projections for the UK in 2023 and why the UK has been forecast to lag significantly behind other developed nations. But economists expect to see growth in 2024.

And don’t forget to listen to the interview with Tatum Getty on The Purse Podcast. Tatum is the Co-founder of THENA Capital, a new UK MedTech fund focused on investing in early stage digital and device companies in the health sector.

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You can review the news in brief so you stay on top of global financial, economic and investing trends.

I hope you enjoy this week’s newsletter.

See you on Wednesday for a (new) bi-weekly update.

Until then,

Jana


The UK recession will be almost as deep as Russia, but are economic prospects in 2023 better than we think?


According to Goldman Sachs, the UK economy is forecast to contract by 1.2% (real GDP) in 2023, which is only 0.1% less than Russia, as reported by CNBC.

Although the EU and UK are likely to already be in a recession, it is possible that the UK economic prospects for 2023 are better than we think. Why?

  • Natural gas prices are half of what has been included in global forecasts.

  • China has ended its zero-Covid policy which is likely to improve the global economic prospects later this year.

Regardless, the UK has been forecast to lag significantly..

… behind other developed nations facing the same macroeconomic issues of surging inflation, rising interest rates, the war in Ukraine and global supply bottlenecks.

This is because the UK faces unique challenges which relate to:

  • A long-term sickness crisis

  • The ageing population leaving the workforce

  • Heavily depleted trade as a result of Brexit

  • More drawn out increase in household energy prices (and possibly more ‘sticky’ inflation)

  • And a lack of investment to fuel growth in the economy.

All of which continues to drive the cost of living crisis for consumers who have no choice but to cut back on spending.

The U.K. independent Office for Budget Responsibility projects that the country faces its sharpest fall in living standards on record. Real household disposable income, a measure of living standards, will fall by 4.3% in 2022-23.

KPMG expects the Bank of England (BoE) to raise interest rates to 4% in the first half of 2023, and forecasts the labour market to start deteriorating. Unemployment is expected to hit 5.6% mid-2024.

Although market consensus is…

.. that the UK will contract by 0.5% in 2023 and will expand by 1.1% in 2024, Goldman is more pessimistic and projects UK growth to only be 0.9% in 2024 compared to Russia’s 1.8% expansion in 2024.

On the other hand, Goldman projects the US economy to expand by 1% in 2023 and 1.6% in 2024.

Globally, nearly all current forecasts suggest growth in the world economy, with cautious optimism expected as the year progresses, and into 2024.

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What next? (Re) listen to The Purse Podcast:


News in Brief


Financial news

Crypto: bitcoin, ethereum, DeFi & NFTs


The Purse Podcast


We cover the following in our conversation:

  • How Tatum set up THENA Capital with her two co-founders

  • Why they're applying a gender smart strategy to how they invest

  • Raising investment: finding the right investors

  • Working with mentors and advisors

  • Lessons learned

  • How women can start to invest in the startup ecosystem via a fund.

Please enjoy! Listen on Apple Podcasts and Spotify+


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