UK to shake off mild recession by end of this year, City analyst predicts

International energy prices have marched back down the steep hill they climbed after Russian president Vladimir Putin sent troops into Ukraine in February last year. On some measures, gas prices are below pre-Russia Ukraine war levels.

As a result, the outlook for the UK economy “has greatly improved,” according to Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics.

The sharp drop in energy costs in recent weeks has blown the gloomiest predictions about the UK and European economies out of the water.

Analysts in the summer were warning of blackouts and businesses mothballing production due to sky-high energy bills.

However, Tombs, who has been a bit more upbeat than his peers over the last year, raised his expectations for output this year.

He now expects “GDP to hold steady” in the summer and then rise 0.2 per cent in the winter.

The revisions mean Britain will be in recession for three quarters of the year and that the economy is on course to shrink 0.8 per cent in 2023, up from Tombs’s previous forecast of a 1.5 per cent contraction.

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