‘Britain is already in the longest recession since records began’: Forecasters expect the downturn to last until the end of next year
The UK has fallen into a recession that will be the longest since records began in the 1950s, economists have warned.
Accounting firm KPMG said the country entered a recession, defined as two consecutive quarters of decline, in the third quarter of the year.
And forecasters expect the slowdown to last until the end of next year, sending the UK’s economic output down 1.9%.
Warning: Accounting firm KPMG said the country entered recession in the third quarter of the year
Chief economist Yael Selfin said the decline was due to soaring energy and food prices facing households.
They have suffered the biggest drop in living standards on record as the rising cost of living eats away at wages. Soaring interest rates in the wake of Liz Truss and Kwasi Kwarteng’s disastrous mini-budget also “added a headwind” to growth, KPMG said in its economic outlook report.
And Selfin said families, especially those on lower incomes, will limit their New Year’s spending and eat out less often. Households had already started to cut their energy bills by the time energy bills soared to £2,500 for a typical household in October.
And KPMG added that by the middle of 2024 UK spending per person will have fallen by 3.4%. Although Britain faces the longest recession on record, Selfin said it will be “less severe” than the downturns of the 1970s and the recession caused by the 2008 financial crisis.
And in a motive for optimism, Selfin said the situation could become more positive, particularly if energy bills return to more normal levels.
The KPMG report also showed unemployment in the UK will remain relatively low, providing “significant support for incomes”.
