'Two to three years' before economy recovers, warns Lord Clarke

Lord Clarke said he was «very concerned» about the state of the economy. Photo: Pennsylvania

Britain faces «at least» two to three years before the economy returns to good health, warned Lord Clarke, the former Conservative chancellor.

A former Cabinet minister suggested that the winner of the next general election will be «out of luck» due to the «serious» financial situation they will face.

It comes after the British Chambers of Commerce (BCC) warned the UK was expected to «stabilize» as rising interest rates would push the economy into a prolonged recession comparable to the oil shocks of the 1970s.

The UK is «on course to avoid a technical recession, but growth is likely to remain so weak that it will be difficult to tell the difference,» the BCC said.

During an interview on Sky News Politics Hub with Sophie Ridge, Lord Clarke was asked how concerned he was about the state of the economy.

1208 Interest rates are expected to remain high for a long time

He replied: “Very worried. Many people don't realize how serious the state of the British economy is.

“Whoever is unlucky enough to win the next election will have to do very difficult and difficult things for two or three years. things. It will take at least that much to return to a healthy economy with growth and low inflation.”

Rishi Sunak has made growing the economy one of his five key priorities, promising to create “better paying jobs and opportunities across the country”.

But he faces the biggest fall in household incomes ever in the next election, according to the Resolution Foundation. The think tank said no government had ever retained power after such weak economic growth.

UK debt in numbers

As inflation rates fall, Chancellor Jeremy Hunt said government action to combat the problem is «starting to take hold» into force,» meaning that «we are laying the strong foundation needed to grow the economy.»

However, BCC forecasts suggest that GDP will grow by just 0.4 percent this year, or 0. 3 percent. next year and a still weak 0.7% in 2025.

The Resolution Foundation said typical working-age household incomes in 2024-25 will be four percent lower in real terms than in 2025 . In 2019-2020, rising inflation is eroding purchasing power.

It said the scale of the fall was unprecedented in peacetime, and added: “Never in living memory have families become so poorer during a Parliament.”