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ING global economic outlook 2023 December 2022 So while we expect the unemployment rate to drift higher – we suspect towards the 4.5% area next year – there is a stronger incentive than usual for firms to "hoard" labour. 3 Inflation unlikely to get back to target in 2023 It looks like 11.1% in October marked the UK’s inflation peak, though we’re unlikely to see the headline rate drop out of double digits until the spring. There are compelling reasons to expect inflation to fall thereafter, especially for durable goods, where Covid- 19 price pressures are cooling rapidly on lower commodity and shipping prices, weaker consumer demand and rising inventory. But with wage growth likely to prove a little stickier in the face of ongoing skill shortages, services inflation is expected to slow more gradually. We think inflation will end the year around 4% before heading more-or-less back to target in 2024.

ING Global Economic Outlook 2023 - Page 30 ING Global Economic Outlook 2023 Page 29 Page 31