The U.K. is teetering on the edge of recession, say economists at Goldman Sachs, as inflation-battered Britons curtail spending and the Bank of England raises interest rates.
The bank’s economists Steffan Ball and Ibrahim Quadri forecast a 0.7% contraction for the second quarter and a 0.1% increase for the third quarter. (GDP data in the U.K. is presented in quarter-on-quarter, rather than annualized as in the U.S.) “This puts the U.K. economy on the edge of a technical recession, and suggests increased focus on U.K. activity data in coming months,” they said.
Recent weak U.K. retail sales data highlighted how households have been tightening purse strings in the face of soaring energy prices. The Goldman team observed that June’s Gfk measure of U.K. consumer confidence fell to its lowest level since records began in 1974.
“Indeed, the GfK report noted that the consumer mood is currently ‘darker’ than…
