Stagflation, the combination of stagnant growth and rampant inflation, is growing louder in the US after the economy shrank for two quarters in a row.
The economy is very close to a recession. The next two years are expected to deliver strong growth after a rapid rebound from the coronaviruses crisis.
Things are different over the pond in the United Kingdom. Growth is expected to slow to a crawl next year, with economists saying Britain is on the verge of a period of stagflation.
The UK's inflation rose to a new 40-year high of 9.4% in June. That is higher than in any of the other G7 countries. It is likely to top double figures by the end of the year.
Inflation, interest rates, and taxes are all hitting the UK economy at the same time. Private-sector economists predict that the country's GDP will grow just 0.7% next year, making it the worst performer in the G7.
The Bank of England is less hopeful. GDP is expected to grow by just 0.25 in the next year.
The US economy is expected to grow 1.3% in the next five years. They think eurozone GDP will go up.
Britain has a warning for policymakers in the US and Europe if things go wrong.
The leaders in the UK are under a lot of scrutiny. The cost of living is going up as rail workers, lawyers and mailmen go on strike. The consumer confidence has plummeted.
Boris Johnson's potential successors trashed the government's economic record in a TV debate.
"All your bills, every month, they're going up and up and up," said Sunak, who was the UK's economy ministry over the last three years. The UK is facing the worst economic crisis in a generation according to the other candidate.
The inflation rate in the UK is much higher than in other rich countries, and is likely to rise this year.
Adding to the pain is the country's energy price cap.
The cap is set to rise by a similar amount in October due to a surge in oil and gas prices.
"Energy prices go up and stay there for a longer period of time, rather than go down with the market," said Raja.
The drop in the British pound has made things worse. The Federal Reserve's rate hikes have caused the dollar to fall against the euro. A weaker pound is making imports even more expensive for the UK.
A shortage of workers is a problem similar to the one in the US. More than 400,000 people have left the workforce since the start of the Pandemic, with half of them due to long-term illnesses.
According to Ruth Gregory, senior UK economist at Capital Economics, companies are increasing wages in order to compete for workers.
She told Insider that there are acute labor shortages which have held activity back in some service sectors.
Gregory said that the UK workforce has been cut by making it harder for people to move.
Raja said that other problems are caused by the fact that Britain is leaving the European Union.
He said that firms are telling them that leaving the European single market will lead to higher tariffs. Imported goods prices have gone up as a result.
In order to cut the budget deficit, tax rises were put in place in April.
Raja said that we are the only advanced economy to have pushed through a tax rise this year in the midst of the cost of living crisis.
The Bank of England seems resigned to a sharp slowdown in growth as it hikes interest rates hard. The Fed's path to a soft landing is larger than that of the SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA.
Millions of Britons are struggling to make ends meet during the worst cost-of- living crisis in a generation.
Wages are falling fast. More and more people are going to food banks. Whoever succeeds Boris Johnson is going to have a hard time.
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