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UK held back by staff shortages, Brexit and mortgage costs, says top economist

UK held back by staff shortages, Brexit and mortgage costs, says top economist

A shortage of workers, expensive mortgages and the continuing effects of Brexit are all weighing on the economy as the UK shapes up to be the weakest major G7 economy this year, the head of a leading thinktank has said.

by Shared from The Guardian | 31 Jan, 2023

Paul Johnson, the director of the Institute for Fiscal Studies, said there were special factors holding back growth in the UK as politicians and analysts responded to a warning from the International Monetary Fund that the UK economy would shrink by 0.3% in 2023.

But Johnson said other countries were not being affected to the same extent as the UK by shortages of labour – identified by the IMF as one factor holding back the UK. Johnson said the UK labour force had half a million fewer people than before the pandemic as a result of people retiring early and fewer EU immigrants.

“That’s not affecting any other country in Europe … That’s a particular challenge for us,” the IFS director said. The continuing “challenges from Brexit” and the rapid impact of higher interest rates on mortgage costs were also factors, he added.