Goldman Sachs sharply cuts UK growth forecasts

Goldman Sachs economists expect a recession in the UK to begin later in the year, as record-high inflation hitting household incomes is dragging consumption down.

Strategists expect Britain’s economic decline to begin in the fourth quarter of the current year, and project the nation’s GDP to contract by 0.6% in 2023, a sharp turnaround from the bank's previous estimate, where it predicted an expansion of 1.1%.

In August, UK consumer confidence dropped to record lows. In the previous month, consumer price inflation in the country surged to 10.1% per annum, smashing a 40-year high as spiraling food and energy prices continued to intensify the historic squeeze on households and businesses.

“Real consumption is still likely to decline significantly,” the economists warned.

Energy bills across the country are set to skyrocket 80% to an average of £3,549 ($4,155) per year from October, government regulator Ofgem announced on Friday. Earlier this month, the regulator said it would adjust the cap quarterly rather than every six months due to intense pricing pressure in energy markets.

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