UK likely already in mild recession

Its research estimates that there’s a 52% chance of a mild recession in the second half of this year, with this being driven by soaring interest rates and rising unemployment meaning households are more cautious about spending.  

Bloomberg Economics’ analyst Dan Hanson said: “It will be a close call between stagnation and a mild contraction, but the odds are tilted marginally in favour of the latter. The risks are that the fall in output is a little sharper than we have penciled in.” 

Hanson also said – as the labour market loosens – consumers may feel more cautious about spending, which could even as their real incomes continue to rise over the winter. He added: “The September money and credit data from the BOE points to households saving more than they have in the recent past.”

The model by Bloomberg Economics also suggests a 70% probability of a contraction in the third quarter after a 0.6% fall in GDP in July and only a partial rebound in August.