![Lord Clarke said he was ‘very worried’ about the state of the economy](https://www.telegraph.co.uk/content/dam/politics/2023/09/07/TELEMMGLPICT000265820058_16940938350080_trans_NvBQzQNjv4BqUrylrCQkFb02Jhz2yNOovh8X0OdIKj5t-tXr-_ah-cw.jpeg?imwidth=680)
‘Two to three years’ before economy rebounds, warns Lord Clarke
Winner of next general election will be ‘unlucky’ because of state of UK’s finances, says former Tory chancellor
![Lord Clarke said he was ‘very worried’ about the state of the economy](https://www.telegraph.co.uk/content/dam/politics/2023/09/07/TELEMMGLPICT000265820058_16940938350080_trans_NvBQzQNjv4BqUrylrCQkFb02Jhz2yNOovh8X0OdIKj5t-tXr-_ah-cw.jpeg?imwidth=680)
Britain faces “at least” two to three years before the economy returns to good health, Lord Clarke, a former Tory chancellor has warned.
The ex-Cabinet minister suggested the winner of the next general election will be “unlucky” because of the “serious” financial situation they will have to face up to.
It comes after the British Chambers of Commerce (BCC) warned that the UK is expected to “flatline” as rising interest rates hammer the economy into a long slump on a par with the oil shocks of the 1970s.
Britain is “on course to avoid a technical recession, but growth is likely to remain so feeble that it will be hard to spot the difference”, said the BCC.
During an interview on Sky News’s Politics Hub with Sophy Ridge, Lord Clarke was asked how worried he was about the state of the economy.
He replied: “Very worried. A lot of people have not taken on board just how serious the state of the British economy is.
“Whoever is unlucky enough to win the next election faces two or three years of having to do very tough and difficult things. It will take at least that to get back to a healthy economy with growth and low inflation.”
Rishi Sunak has made growing the economy one of his five key priorities, pledging to create “better-paid jobs and opportunity right across the country”.
But he faces fighting the next election against a backdrop of the worst drop in household incomes on record, according to the Resolution Foundation. No government had ever retained power after such weak growth, the think tank said.
With inflation rates coming down, Jeremy Hunt, the Chancellor, has said government action to fight the problem was “starting to take effect”, meaning that “we’re laying the strong foundations needed to grow the economy”.
But BCC forecasts suggest that GDP is set to grow by just 0.4 per cent this year, 0.3 per cent next year and a still-weak 0.7 per cent in 2025.
The Resolution Foundation said typical working-age household incomes were on course to be four per cent lower in 2024-25 in real terms than they were in 2019-20 as soaring inflation erodes spending power.
It said the scale of the drop was unprecedented in peacetime, adding: “Never in living memory have families got so much poorer over the course of a parliament.”