The outlook for the UK’s economy is looking fairly bleak.
The Bank of England raised interest rates again on Thursday and has warned the UK is heading for its longest recession since the 1930s Great Depression.
Here are five things we learned from the central bank about the future of the economy.
1. UK set for two-year recession
The UK is facing its longest recession on record, with the Bank of England warning the country faces a “very challenging” two-year slump.
When a country is in recession, it’s a sign that its economy is doing badly. A recession is when a country’s economy shrinks for two three-month periods in a row.
This has been forecast in the UK for some time due to the prices of goods such as food, fuel and energy soaring, which is down to several factors, including the war in Ukraine.
Previously, the Bank had expected the UK to fall into recession at the end of this year and said it would last for all of next year.
But now it thinks the economy already entered a recession this summer, and predicts it will continue next year and into the first half of 2024.
2. Unemployment rate to nearly double
Typically when a country is in recession, companies make less money and the number of people unemployed rises.
Graduates and school leavers also find it harder to get their first job.
The unemployment rate in the UK is set to rise significantly over the next two years to 6.4%, the Bank predicts.
Currently, the jobless rate is at 3.5%, its lowest level since 1974, thanks to a jobs boom as the economy started to recover from the pandemic.
But experts were already warning that the tide might be starting to turn due to the number of job vacancies falling in recent months. – BBC
