The global economy remains unbalanced as the pandemic disrupts global trade, supply chains and international relations. As a result, individual economies diverge and data is unpredictable and volatile.
Decision-makers, be they in business or public policy, will struggle in 2023, not least because no clear trends seem to emerge.

Global economy

After narrowly escaping a financial accident, the global economy is poised to slow significantly in the first months of the year as interest rates continue to rise and inflation remains far from beaten. At the same time, regional economic divergence is increasing. The world remains a very unbalanced place and supply chain uncertainty is at its highest in many years.

UK Economy

Growth is set to slow down in the UK in 2023, more than in its developed market peers. Consumption and services look better than manufacturing, but the latter is usually a leading indicator, which means we could yet see a slowdown. The Windsor framework, if implemented, can significantly improve the longer- term outlook.


After several months of dismal performance, consumption in the UK has unexpectedly picked up. However, we remain sceptical about the sustainability of this trend.


Unemployment is low but job vacancies remain very high. This means that there aren’t enough skilled workers to fill in jobs. Market forces alone are proving insufficient to solve this issue, especially in a climate of economic uncertainty, which may require a more systemic approach to resolve.


As global economies diverge, the Bank of England has signalled that its close to, or even possibly at, the end of its rate hike cycle. However, the course is far from linear, and the decisions of other central banks,
as well as global inflation, will continue to influence UK rates.


Inflation is falling, albeit at a slow pace. Consensus expects less than 7% inflation by the end of 2023 and less than 3% by the end of 2024. The road to getting there, however, will probably not be a smooth one.

Real Estate
The real estate is set to slow down, as consumers are pressured and the number of office workers is reduced. However, as long as interest rates level off and supply remains constrained, we expect the damage to be contained.


Last year, windfall energy profits lifted British businesses. However, this year is projected to be difficult in terms of bottom-line earnings, as rising wages and lower demand put pressure on profits.

George Lagarias – Chief Economist