The National Institute of Economic and Social Research (NIESR) has said that, in early 2022, inflation in the UK is likely to jump to almost double the Bank of England’s target rate. NIESR predicts that inflation would then recede to 2% in 2023, following a bank interest rate hike. If the forecast is correct, this would be the highest rate of inflation seen since 2011. The UK’s growth forecast was also revised for 2022 by 1.1 percentage points up to 6.8%. 

Only London and the West Midlands are predicted to have gross value added of more than 4% higher than pre-pandemic levels. Removing the pandemic from the equation, this is only half the expected growth. 

NIESR’s deputy director Hande Kucuk said that the Bank of England should take a carefully communicated and steady approach to avoid tightening financial conditions that could impact the country’s financial recovery.