Economic Monitor
GDP contracts, Unemployment lowest since 1970s
Following a change in government, some calm appears to have been restored to financial markets, with expectations of peak interest rates having lowered over the past week. However, mounting inflation for both producers and consumers is contributing to a perfect storm of demand destruction within the economy. The UK is hence expected to enter a recession by the end of the year with output contracting into 2023H1. Inflation was forecast by the Bank of England (in September) to peak at just under 11% in Q4 2022. However, rising oil prices pushing up the cost of fuel heightens the risk of a second wave of inflation in addition to uncertainty over energy prices come April 2023Harvir Dhillon, Economist at the British Retail Consortium
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