The UK is expected to fall into recession before 2022 is up, according to the British Chambers of Commerce. However, according to the actions of the government, the UK could return to economic growth as soon as next year.
Since it was founded in 1860, the British Chambers of Commerce (BCC) has represented businesses of every size, from every sector, with members in both every region of the UK, and in over 70 markets around the world. Due to its diverse membership, the organisation believes it has unique insight into the UK’s economy – something backed up by the fact its flagship Quarterly Economic Survey regularly receives over 7,000 responses, making it the largest and most representative of its kind in the UK.
This means that when it anticipates a recession, people take notice. That is the situation now, as the BCC has suggested the UK is set for three consecutive quarters of contraction, between the second and fourth quarter of 2022. However, unlike the Bank of England, the BCC has also anticipated there may be slightly more cause for optimism, with regards to how deep the crisis becomes.
If the UK economy does record three consecutive quarters of contraction, it has satisfied the definition of a recession – something that has long been dreaded by economists. Earlier in the year, the Bank of England also confirmed that it expected the UK to endure its longest downturn since 2008, when the UK banking system faced collapse. While it suggested the slump is not set to be as deep as 14 years ago, it may last just as long.
However, unlike the Bank of England, the BCC has suggested the economy will return to growth in 2023. While this would be a very low 0.2%, this would mildly increase to 1% in 2024 – painting a mildly more optimistic outlook for the current situation. But Alex Veitch, Director of Policy at the BCC, suggested that this all depends on what course of action the government takes now.
Veitch noted, “The extreme inflationary pressures already present are only likely to increase as we head towards Christmas; with the UK economy already thought to be in recession. Tackling these pressures must be at the top of the new Prime Minister’s inbox when they take up their position this month.”
The BCC’s forecast also suggested unemployment may rise substantially in the coming months. It could hit 3.8% this year before rising to 4.1% next year and in 2024. However, inflation is expected to peak at 14% in the final quarter of 2022, falling to 5% by the end of 2023 – and further to the Bank of England’s target 2% by the final quarter of 2024.