The IMF has announced that the global economy is facing a potential downturn, with rising prices around the globe as a result of the war in Ukraine. The organisation stated that “for many people, 2023 will feel like a recession”, and emphasised the need for international cooperation between governments and central banks to alleviate populations bearing the brunt of the coming economic downturn.
Based on recent forecasts, the United Kingdom is at a high risk of experiencing a sustained recession for the next three quarters. However, all analysts are in agreement that the Government’s recent intervention on energy bills has significantly decreased the likelihood of a severe downturn. High energy prices, rising inflation, and increasing interest rates caused by global economic weakness are the main reasons behind this predicted period of recession.
Some forecasts, such as Goldman Sachs’ revised analysis, outline that the United Kingdom is still likely to enter a deeper than expected recession in 2023. In an analysis released mid-October, the investment bank downgraded its outlook for Britain, forecasting the UK economy would shrink by 1% next year, lower than their previous estimate of 0.4%.