2-year recession expected as UK economy starts to shrink

Wednesday 16th November 2022 05:55 EST

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. 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 unemployed people rises. Youngsters 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". 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.

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