Expert Warns UK Is Sliding Into Economic Stagnation

Dr Roger Gewolb on the 2024 Economic Forecast

Finance guru, political campaigner, broadcaster, and geopolitics‑economics maestro, Dr Roger Gewolb – head of the Campaign for Fair Finance – weighs in on the hottest talking points for 2024: inflation, economic growth, and the looming pre‑election buzz. The latest consumer and producer price index figures due on Wednesday are sure to keep the headlines buzzing.

Bank of England’s Rate Roller‑Coaster

“Good, not great” – since Dr Gewolb’s last critique, the BoE has nudged rates 14 times in a row and now sits at 5.25%. He insists it’s high time the Bank pulls the brakes, or else the damage will keep piling up.
“Immediate rate cuts are overdue” – partnering with economist Catherine McBride and a handful of others, Dr Gewolb calls for a hasty reduction and sweeping reforms.

A Wobbly Inflation & Fragile Growth Snapshot

Dr Gewolb explains how a small dip in petrol prices has offered a trickle of relief: “UK inflation’s outlook is looking a tad brighter thanks to the petrol slump, but that’s nothing to do with the Bank’s rate moves.”

As for growth, the latest ONS data is a sobering reminder:

GDP surged a modest 0.3% in November.
Over the three months ending then, growth slipped to a –0.2% dip.
Black Friday and early Christmas sales gave the superficially positive November figure a bit of a boost.

Why “Wage‑Driven” Inflation is a Misfire

The BoE’s statement that “elevated wage growth signals ongoing inflationary pressures, justifying rate falls” comes with two blind spots:

UK inflation is largely cost‑push, driven by pricier materials and services, not consumer spending.
High rates just prolong that type of inflation, dragging the UK toward a “stagnation nation” scenario.

Dr Gewolb scoffs at the mismatch: “Calling it consumer‑driven inflation from wage rises, which themselves are a reaction to rate hikes, is sheer nonsense.”

Why the Market and the Red Sea Matter

Experts warn that the Red Sea conflict isn’t the sole inflation trigger, but a flare‑up could inflate fuel and supply‑chain costs, pushing rates higher again.

Dr Gewolb predicts a cautious trajectory for the Bank:

Rate may dip from 5.25% to around 5% over the year, kicking off in May.
Nonetheless, that may not be enough: inflation sits at 3.9%, far above the 2% target.
He stresses, “If shipping gets shaky in the Red Sea, the Bank should keep rates where they are until calm returns and then start cutting.”

US vs UK: A Tale of Two Consumer Drivers

After a whirlwind trip to the United States, Dr Gewolb noted that US inflation is largely demand‑driven, a stark contrast to the UK’s cost‑push nature.
He cautions the BoE against blindly following the Federal Reserve’s potential rate hikes.
“Listen to multiple viewpoints before lauding the U.S. approach,” he says, “otherwise you’ll track the wrong track.”

What Comes Next for Britain?

Dr Gewolb casts a forewarning:

The economy is expected to remain sluggish in the short term. Even with headline inflation easing, high rates still gnaw at businesses and households.
“Companies need long‑term plans that champion growth – not just economic gimmicks.”
He urges politicians to put the budget and election campaigns on a growth‑centric footing, not chase the superficial rhetoric of victory over inflation.