A recession in the UK is no longer likely, JP Morgan reckons, thanks to lower gas prices and unclogged supply chains and improving business confidence.
Having previously predicted a fall in gross domestic product (GDP) for the first half of 2023, the US investment bank has now updated its forecasts after yesterday's stronger than expected purchasing manager’s index (PMI) data.
Whereas 61% of investors still think European growth will slow in response to tightening credit conditions (down from 70% last month) a growing share of 33% expects growth to be resilient thanks to savings and order backlogs.
Other recent macroeconomic numbers have also backed up its view, showing the "resilience" in UK's jobs market vacancies and rising business confidence.
The bank's economists said a more optimistic picture for the UK has been tough due to the gloomy outlook for household real incomes, which it had previously expected to fall 1.5%.
The new forecast is in line with the latest research by the respected National Institute of Economic and Social Research (Niesr), which said earlier this month that the UK should avoid recession – though it will still feel like the economy is in reverse gear.
It is also in sync with a fast-improving wider consensus among fund managers about the global economy, with last week's Bank of America’s Global Fund Manager survey showing a net 24% think the global economy will go into a recession over the next twelve months, down from 51% last month and a peak of 77% in November.
Also today, Citigroup also improved its forecasts for the UK economy, foreseeing consumer price inflation falling to 2.3% by the end of the year from the 10.1% the Office for National Statisitcs reported last week.