Recession to be more than twice as bad as first feared, forecasters warn - CITY .A.M
by Story by Jack Barnett
Soaring prices coupled with the Bank of England’s efforts to tame them are set to deal a heavier blow to GDP than projected just a few months ago.
According to the EY Item Club, the economy will shrink 0.7 per cent this year, worse than the 0.3 per cent the organisation forecast in October.
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The cumulative lost GDP will be about the same amount shed during the recession in the early 1990s that saw house prices collapse and the UK crash out of the European Exchange Rate Mechanism.
The recession will be a lot shallower than the ones sparked by the financial crisis and Covid-19 pandemic.
The UK economy unexpectedly grew 0.1 per cent in November, ONS figures earlier this month revealed, raising hopes that the country narrowly avoided a technical recession – two back-to-back quarters of contraction – at the end of 2022.
But, the government reining in energy bill support and raising taxes has put the economy on a weaker long term path.