It is anticipated that the UK Economy will suffer more than any other leading nation from the global energy crisis. Out of the G7 group, which includes the UK, US, Canada, France, Germany, Italy and Japan, only UK and German economies are expected to shrink.
Although there has been widespread pessimism among economic and political commentators, Pound Wholesale believes there is room for optimism over the next couple of years.
Despite a recent surge on the pound against the dollar, which reached a post-Liz Truss premiership high following the infamous Mini Budget, the Organisation for Economic Cooperation and Developments (OECD) forecasts that the UK economy will shrink by 0.4% in 2023 amid a “significant growth slowdown”.
However, the latest Conservative Prime Minister Rishi Sunak insists that the UK was forecast to be the fastest growing economy in the G7, which appears to reject the OECD’s forecasts.
"We're taking a different approach post-April to the energy support, targeting it towards the most vulnerable," said Sunak. "These are challenges that are affecting different countries at slightly different times. We emerged from the pandemic faster than many other countries in Europe. But some of these challenges are shared.”
Out of the G20, only Russia, who are subject to a range of economic sanctions, is expected to perform worse economically in 2023 than the UK, according to the OECD.
The OECD predicts that the world economy will grow by 2.2%, which is largely thanks to the performance of emerging economies.
It asserted that economies across the globe were affected unevenly by the conflict in Ukraine, with European countries facing the toughest challenges with spikes in energy prices and impact on business and trade.
Conversely, the UK’s Office for Budget Responsibility (OBR) have forecasted only a 1.4% fall next year, and even stronger growth than the OECD have predicted in 2024. Still, the OBR are predicting that the UK is facing its biggest fall in living standards on record.
The Impact of Energy Prices on Overall Inflation
The UK has been suffering from rapid inflation over the last year. The OECD has explained that, as the UK Government are attempting to help households and businesses by subsidising energy bills, which reduces the immediate inflation rate, this is likely to cause inflationary pressure in the medium-term by increasing demand on the economy. This would in turn lead to the Bank of England raising interest rates and add to the cost of managing debts.
The OECD are encouraging the UK governments and governments in general to “better targeted measures to cushion the impact of high energy prices would lower the budgetary cost, better-preserve incentives to save energy, and reduce the pressure on demand at a time of high inflation”.
Pound Wholesale Analysis – Pricing Update
Although there has been a lot of UK inflation which has considerably impacted the prices we’re able to offer, there has been a huge reduction in the cost of freight, improved Pound Sterling (GBP) performance against the US Dollar, and many shipping and distribution agents are far better informed as to the circumstances and markets in which they’re operating.
Furthermore, if there is an end to the conflict in Ukraine, we’re expecting a huge slowdown in the rate of inflation.
Businesses in Britain have faced an unprecedented period, from Brexit and the Covid-19 Pandemic to unrest and economic recession. Although it is a very tough time for many enterprises, it’s likely to better equip businesses for the challenges that lie ahead.
As a wholesaler that operates in the discount sector, the importance of delivering excellent value to our customers cannot be understated.
To help support all our customers, businesses and entrepreneurs, we’ve invested heavily to ensure that there is plenty of stock available across all product ranges and have secured stock for next year to retain as much value as possible.
We’re also in the process of delivering new products and product ranges, in addition to the 6,000 products we currently have. Heavily aligned to fast-moving-consumer-goods and the vital essentials that consumers require daily, we’re optimistic that our incoming products will help retailers move stock quickly to get business moving.
There is certainly a squeeze on UK expenditure, meaning that consumers will be looking for budget options more than ever. We’re continue to seek low cost, budget alternatives without compromising on quality and performance. Though we’re not yet seeing the anticipated drop in material, manufacturing, shipping and internal costs to substantially drop our product prices, we will seek to decrease prices wherever possible to deliver better value for our customers.