The spectre of recession is looming over the UK as unemployment hits 5%, higher than most analysts had predicted. The Office for National Statistics figures, released last week, are in some dispute but point to a weakening jobs market and slowing wage growth.
Taking out the “skewed levels” of the pandemic years, said the BBC, this unemployment rate is the highest since August 2016. With latest official data also showing that GDP grew by only 0.1% in the third quarter of this year, alarm bells are ringing.
What did the commentators say? A “gang” of chief executives “fired warning shots at the Treasury” in September, said City A.M. editor-in-chief Christian May. One claimed we are heading for a recession, which is a “big call”. More people are talking about stagnation – “an equally ugly phrase” – but that we’re talking about recession at all is “telling, and alarming”.
To count as a recession, the economy has to have two consecutive three-month quarters in negative territory, and while ours grew by 0.7% in the first quarter and 0.3% in the second, we’re now “flatlining”, said The Independent’s James Moore. Last week’s unemployment stats “caught most economists on the hop”; they “weren’t expecting anything quite as bad”.
Britain’s economy is “in the dog house”, said The Economist. “Inflation is sticky, debts and deficits are high, and productivity growth is low.” Infrastructure and housing projects are “turning out to be a sorry disappointment”. But “some of the doomsaying is overdone”. Britain’s “structural strengths”, such as its universities and the City of London, are “enduring”.
What next? No mainstream economist has “a fully blown UK recession pencilled in” for the coming year, said The Telegraph’s Jeremy Warner. Recessions “generally require some sort of trigger” – although it may not be necessary for the UK, given that the economy “seems instead to be simply dying”.
ONS figures published today showed that inflation fell to 3.6% in October, down from 3.8% in September. This “slight improvement offers limited relief”, said The Spectator. All eyes will be on how the chancellor navigates this in next week’s Budget.
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