The Bank of England warned Thursday that the U.K. is facing its longest recession since records began, with the economic downturn expected to extend well into 2024.
The central bank described the outlook for Britain’s economy as “very challenging,” noting that unemployment would likely double to 6.5% during the country’s two-year slump.
U.K. GDP is projected to decline by around 0.75% over the second half of 2022, reflecting the squeeze on real incomes from surging energy and tradable goods prices, the Bank said.
Growth is projected to continue to fall throughout 2023 and the first half of 2024, as “high energy prices and tighter financial conditions weigh on spending,” it added.
The forecast, outlined at the Bank’s Monetary Policy Committee meeting Thursday, would constitute the country’s longest — though not deepest — recession since the 1920s when reliable records began.
At its meeting in August, the Bank had predicted the U.K. was facing its longest recession since the global financial crisis, lasting five quarters to the end of 2023.
The eighth consecutive rate hike marks the central bank’s continued efforts to tame rampant U.K. inflation, which hit a 40-year high of 10.1% in September, and edge costs down toward its 2% target.
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