Britain could fall into recession this summer, say experts
Britain’s economy is at growing risk of falling into a summer recession amid the biggest squeeze on household incomes since the mid 1950s, as soaring inflation curtails consumer spending power, forecasters have warned.
Economists said the double blow from slowing post-lockdown growth and rising living costs after Russia’s invasion of Ukraine could result in a fall in gross domestic product (GDP) for two consecutive quarters, which is the definition of a recession.
Following a weaker than expected growth performance in February, and with the inflation rate reaching the highest levels since 1992 last month, City forecasters said UK GDP was now on track to grow by about 1% in the first quarter of 2022 before slipping into reverse this summer.
Analysts said activity would be reduced by an extra bank holiday for the Queen’s platinum jubilee in July, as public holidays usually lead to a drop in overall economic output. The return to lower rates of activity in the health sector after a winter rush to vaccinate people against Covid, as well as households reining in their spending amid the soaring cost of living, are also expected to weigh on growth.
James Smith, an economist at the Dutch bank ING, said the economy was likely to shrink in the second quarter. The bank forecasts a 0.3% contraction in the three months to the end of June, followed by growth of just 0.2% in the third quarter.
“It’ll be pretty close to a technical recession. Even if one is avoided then we’ll still only see fairly unexciting growth numbers,” Smith said.
“If people are spending more money on energy you’d expect some of the non-essentials to fall in sales volumes. That’s what we’ll be watching,” he added.
Figures from the Office for National Statistics due on
Read more on theguardian.com
