The UK is likely already in a recession due to soaring interest rates and rising unemployment, Bloomberg reported on Monday.
According to analysis by Bloomberg Economics, the country’s GDP likely shrank by 0.1% in the third quarter, and there is a 52% chance of another contraction in the last three months of the year. This would place the UK in a technical recession, which is defined by two consecutive quarters of decline.
“It will be a close call between stagnation and a mild contraction, but the odds are tilted marginally in favor of the latter. The risks are that the fall in output is a little sharper than we have penciled in,” analyst Dan Hanson said in the report. He added that with the labor market “loosening,” consumers in the UK may feel more cautious about spending in the coming months.
“This is even as their real incomes continue to rise over the winter. The September money and credit data from the BOE [Bank of England] points to households saving more than they have in the recent past.”
The Bank of England last week also predicted a 50% chance of a recession in the second half of the year. Official data on Britain’s GDP in the three months through September is expected to be published on Friday.
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