Recession will last until summer, EY and Goldman warn

Britain will be in recession until next summer, the EY Item Club and Goldman Sachs have warned. As Whitehall officials battle to restore the UK’s economic credibility after weeks of turmoil, the EY Item Club now expects gross domestic product to contract by 0.3% next year, down from a previous estimate of 1% growth. However, it said the risk of a severe downturn had been mitigated by the government’s intervention on energy bills. Officials at the Bank of England are widely expected to order another interest rate rise next month, with markets pricing in a 57% chance of a 75-basis point increase and a 42% chance of a full percentage point. Inflation data for last month, due out on Wednesday, is expected to show that prices rose by around 10% – five times the Bank of England’s target. Goldman Sachs has downgraded its forecast for the UK economy, warning of a “significant recession”. Goldman expects GDP to contract by 1% next year, down from its previous estimate of a 0.4% contraction. The Times (£) The FT (£)