The UK economy is forecast to dip into recession by the end of this year, with the deep contraction lasting until 2024, Goldman Sachs found.
In a research note, the economists at the bank said that the UK would likely experience a recession by the end of this year.
The UK's gross domestic product is expected to fall by around 1% through mid-2023, the note said, and annual output next year will likely shrink by 0.6%, a jarring turnaround from its previous estimate of a 1.1% expansion.
Economists at the bank, led by Sven Jari Stehn said that "concerns around cost of living pressures in the UK have continued to intensify on the back of the worsening energy crisis. Real consumption is still likely to decline significantly".
OBR confirms work on forecast for emergency budget
The bank's current base case was for the recession to be "relatively mild given fiscal support, excess savings and strong labour market momentum."
The UK's outlook is already indicating a rough close to the year as UK inflation reached a new 40 year high last month to 10.1%, surpassing the 9.8% forecast.
Citigroup has forecast inflation hitting 18.6% in January next year, as the impacts of rising energy costs and a cost-of-living crisis dampening consumer spending play out.
The energy regulator Ofgem announced last week that UK household energy bill is now forecast to hit £3,549 from October. This would be an 80% rise on the current price cap, resulting in households paying around £2,300 more on their annual energy bills than they did in October 2021.
In the backdrop to all of this, the Bank of England echoed warnings of an extended recession at its last rate hike, when savings rates increased to 1.75%.
