The National Institute of Economic and Social Research (NIESR), a leading think tank, said Britain was sliding into a recession that will hammer the most deprived areas of the country and force more than a million households to choose between heating their homes and purchasing sufficient food, Report informs via Reuters.
Consumer price inflation hit a 40-year high of 9.4% in June, and NIESR expects it to be slow to fall, averaging 6.9% next year.
While the final two candidates in the race to become Britain’s next prime minister, Liz Truss and Rishi Sunak, debate tax cuts and public spending restraint, NIESR said resources should be diverted urgently to help the most vulnerable.
NIESR Director Jagjit Chadha said ordinary Britons would pay the price for years of what he viewed as under-investment in public services, which had left them vulnerable to successive economic shocks like Brexit, COVID-19 and the war in Ukraine.
A recession was likely to begin in the current quarter, with a 50/50 chance that the economy would end this year smaller than its level in late 2021, NIESR’s forecasts showed.
The economy was likely to see annual average growth of 3.5% this year – reflecting a favourable comparison against output in early and mid 2021, when COVID restrictions were still in place – but would grow just 0.5% in 2023, NIESR predicted.