“Eye-watering decisions needed, we should be under no illusion that there is a tough road ahead”
The UK economy shrank between July and September as the country heads into what is expected to be the longest recession on record.
The economy contracted by 0.2% during the three months as soaring prices hit businesses and households.
A country is in recession when its economy shrinks for two three-month periods in a row. The UK is expected to be in one by the end of the year.
READ ALSO: UK Issues Alert on ‘Terror Attack’ In US, Warns Citizens
Indian, Kenyan Roots, 42; Meet Rishi Sunak, Youngest UK PM in 200 Years
Dollar Hoarders, Speculators Lose As Naira Rebounds to 720/Dollar
I mixed HIV Blood With Zobo Drinks I Sell, Lady Confesses, Expert Reacts
The Bank of England has forecast a “very challenging” two-year recession.
A recession has been widely expected in the UK due to the prices of goods such as food, fuel and energy soaring, which is down to several factors, including the war in Ukraine.
Higher prices for goods has led to many households facing hardship and cutting back on spending, which has started to drag on the economy.
When a country is in recession, it’s a sign that its economy is doing badly.
During recessions, companies typically make less money and the number of people unemployed rises. Graduates and school leavers also find it harder to get their first job.
This means the government receives less money in tax to use on public services such as health and education.
The Bank of England expects the UK recession to be the longest since records began in the 1920s and said unemployment will almost double.
Chancellor Jeremy Hunt said he would try to make any recession “shallower and quicker” than predicted.
But he has warned of “eye-watering” decisions needed on public spending and taxation to “restore confidence and economic stability”.
Mr Hunt said he was “under no illusion that there is a tough road ahead”.
He is set to unveil his tax and spending plans next week in the Autumn Statement, which comes as households are being squeezed by the worst cost-of-living crisis since the 1950s.
Sam Burrows, managing director of Bristol Beer Factory, told the BBC he has been weighing up how much of his soaring business costs can be passed on to customers in recent months.
“We can’t price consumers out. We need people in pubs eating, drinking and enjoying the hospitality sector, so it’s a balancing act for me,” he said.
Mr Burrows said he wanted to invest and expand his business but was having to factor in the current economic climate.
However, he said the World Cup and Christmas were coming at the right time.
“A bit of national pride and some positive energy with a good performance in the World Cup, Christmas spending, it’s all going to help hospitality,” he added.
Countries all around the world are experiencing high price rises, but the UK economy is performing the worst compared to other major nations, and is smaller than it was before the Covid pandemic.
The Office for National Statistics (ONS), which published the economic growth figures, said UK business investment had dropped in the three months to September and also remained below its pre-pandemic levels.
The performance of the economy is measured by the value of all the goods and services produced by the UK. This number is known as the gross domestic product (GDP).
The fall in GDP in the three months to September was driven by a decline in manufacturing, which was seen “across most industries”, the ONS said.
The ONS publishes its estimate of GDP and does sometimes revise it upwards or downwards. For example, it initially estimated that the economy shrank by 0.3% in August, but later revised that and said it shrank by 0.1%.
Source: BBC
