Britain’s economy is expected to shrink around 0.2% each quarter from October through to June next year, economists have warned. This prolonged economic decline will result in a 0.3% fall in gross domestic product (GDP) for 2023 as a whole, the EY Item Club predicted in its autumn forecast.
The economic forecasting group has significantly downgraded its previous summer forecast which estimated the economy would grow by 1% in 2023. A combination of high energy prices, surging inflation, rising interest rates and global economic weakness have driven up the likelihood that the UK economy will face a recession until the middle of next year.
An economy enters a technical recession when its GDP falls for two or more consecutive quarters. However, the risk of a severe downturn has been reduced by the Government’s energy bills cap, EY Item Club said, meaning that it will not be as bad as previous recessions.
