Goldman Sachs sees UK economy slipping into recession later this year
A leading US-based investment banking company has warned of a recession looming over Britain as a result of surging inflation and worsening cost-of-living crisis that has hit Britons hard in recent months.
Economists at American financial services company Goldman Sachs Group Inc. have sharply cut British growth forecasts, expecting the country’s looming recession to begin in the last three months of 2022.
The company has also forecasted the economy to contract by 0.6 percent in the next year, a sharp turnaround from Goldman’s previous estimate of a 1.1 percent expansion.
The development comes as the British energy bills are set to jump by 80 percent to an average of 3,600 pounds a year from October, the regulator said on Friday, informing of a terrible situation for Britons, especially for the poor and the bottom half of the socioeconomic strata of society.
The country’s gross domestic product (GDP) dropped 0.1 percent in the April-June period, the Office for National Statistics (ONS) announced earlier this month, noting that the UK’s economy slumped 0.6 percent in June.
In its latest research note on Monday, Goldman revealed that the UK’s GDP is expected to fall by another 1 percent through mid-2023.
The UK is grappling with skyrocketing inflation which has been unprecedented for decades, prompting thousands of people in different industries to strike over payments, as they have trouble making both ends meet.
“It is a major problem because what is happening, of course, is, first of all, real incomes are falling because people are not getting wage settlements in line with inflation but below inflation,” said Keith Pilbeam, Professor of Economics at the City University of London.
Amid demands for immediate government measures to deal with the country’s economic situation and cost-of-living crisis, the outgoing Prime Minister Boris Johnson has said that he will not make "major fiscal interventions" before leaving office next month.
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