According to Bloomberg analysis, the UK is currently experiencing a recession

According to a Bloomberg Economics estimate, Britain is most likely already in a recession as a result of households becoming cautious with their spending due to rising unemployment and interest rates.

According to an analysis by Dan Hanson and Andrej Sokol of Bloomberg, there is a 52% probability that the second half of this year will see a mild recession, which is defined as two consecutive quarters of contraction. The research was released on Monday, prior to the official GDP figures that were scheduled to be released on Friday.

Prime Minister Rishi Sunak would have troubles from a recession because he is running for office in the next year. A recession could make it more likely that the Bank of England may decide to lower interest rates, particularly if inflation has decreased significantly.

Hanson stated in a note released on Monday that "it will be a close call between stagnation and a mild contraction, but the odds are tilted marginally in favour of the latter." "There is a chance that the output decline will be somewhat more abrupt than anticipated."

According to economists' predictions, the GDP shrank by 0.1% in the three months ending in September, according to a Bloomberg survey conducted as of Friday afternoon. By 2026, the BOE projects that the 4.3% unemployment rate will increase to 5.1%.

Hanson is one of the few economists who believe that the UK will experience a recession. According to surveys, there was a significant decline in job openings and a decline in output during the second half of the year.

A 70% chance of a contraction in the third quarter is indicated by the Bloomberg Economics model, which already projects a mild recession. This comes after the GDP shrank by 0.6% in July and only partially recovered in August. Within its prediction horizon, the Bank of England last week projected that there was a 50% likelihood of a recession.

(Sources: bloomberg.com)