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How bad would the recession be.

 Economists broadly expect Britain to enter a recession this year but are divided on whether prospects

Recession

for its depth and length are worsening or improving.

The recession will be more profound than expected, according to forecasters at the EY Item Club, because people appear more cautious about drawing on their savings and because the rate of economic inactivity, which measures the share of working-age people who are neither working nor looking for work, has not fallen as quickly as expected.

Hywel Ball, EY’s UK chairman, said the outlook had become «gloomier» than had been forecast in the autumn but added: «The chief headwind to activity over the last year — high and rising inflation — may be starting to retreat, while energy prices are falling, too».

Analysts at JP Morgan, the American bank, believe that the fall in wholesale gas prices indicates that the economy will shrink by less than previously expected because it will ease the burden of energy bills for households and businesses. Last week, they said GDP would contract by 0.1 per cent this year, down from their previous estimate of a 0.3 per cent decline.

That would still leave Britain trailing other European countries, including Germany, France and Spain, which the bank forecasts will avert recession this year.

Four in ten small and medium-sized businesses plan to cut jobs this year over recession fears, according to a survey of 500 business leaders by Censuswide and Fiverr, a company that connects businesses with freelancers.

Economists expect unemployment to rise from its near-record low of 3.7 per cent as weaker demand reduces the need for workers.

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Comments

  1. Simone23 January 2023 at 12:33

    I'm certain that more than 4 in 10 small and medium-sized businesses will choose to cut job this year. The economy is hardly moving in the right direction and business owners need to make hard choices this year.

    ReplyDelete
    Replies
    1. Craig23 January 2023 at 12:39

      Many will lose their jobs. Some businesses prefer working with freelancers whenever possible than having an actual employee. Why? Because it costs them more.

      Delete
    2. Laura Richards23 January 2023 at 13:02

      @Craig, yes, the government needs to address this and make it so that businesses have an incentive to hire people and keep them hired.

      Delete
  2. Will23 January 2023 at 13:17

    Unfortunately Britain will indeed (most likely) be behind countries like France, Germany or Spain, whose economies are looking stronger. If it wasn't for Brexit, the UK would be in a much better state.

    ReplyDelete
    Replies
    1. Anonymous23 January 2023 at 13:47

      I think we will have to wait at least another 5 years (at best) until the effects of Brexit start to wear off.

      Delete

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