The UK economy will enter recession in the fourth quarter of this year, with the risk of a “deep contraction” due to rising energy prices.

According to investment banking group Goldman Sachs estimates cited by a Bloomberg agency, GDP is expected to fall around 1% to mid-2023. Meanwhile, the annual production rate will fall by 0.6%, marking a change of direction compared to the forecast that this indicator will grow by 1.1 percent.

Likewise, the experts at Goldman Sachs predict that UK household saving rate to fall below “break even rate”until it reaches a historical low of 3.5% in the second quarter of 2023. As for real disposable income, it will fall by 2.9% next year, which is reflected in a 1.4% decline in real consumption , published RTenespañol.

On the other hand, analysts point out that british bankwhich on August 4 raised interest rates by 0.5 percentage points to 1.75%, marking the most drastic change since 1995, will be followed by a tightening of monetary policy.

Notes

“We see the risk of skewing toward a more severe and prolonged recession. Gas prices may remain high for longer, households may cut back on excess savings, and the amount of additional tax breaks for households may turn out to be lower than anticipated in our scenario. basis,” the experts concluded.

In this context, UK economy at risk of contracting up to 3.4% throughout the following year. However, the central bank’s baseline forecast suggests a “relatively mild” recession.

Meanwhile, current inflation rate is well above the 2% targetstood at 10.1%, the highest figure since February 1982.