Advertisement
News

The Bank of England has warned the UK is facing the longest ever recession. Here’s what it means

Confused about what the news of a recession actually means? We’ve broken it down here

The Bank of England has warned that the UK faces its longest ever recession, as it raises interest rates by the highest amount in 33 years.

The recession could last into 2024, bringing a host of associated economic problems.

But these can often feel quite abstract. So we’ve broken down what it all means.

What is a recession?

A recession is defined as two successive quarters of negative GDP growth. Essentially, it’s six months where the economy shrinks.

The Bank of England has said the UK is already in a recession.

Your support changes lives. Find out how you can help us help more people by signing up for a subscription

Advertisement
Advertisement

Inflation should fall from the middle of next year

The bank said inflation would remain at over 10 per cent in the “near term”, but begin to “fall sharply” from mid-2023 as interest rates rise. Inflation could fall to below two per cent in the following years.

But bear in mind inflation falling does not mean prices fall – they’re still going up, but just by slightly less.

Unemployment is expected to shoot up

Unemployment currently sits at 3.6 per cent. But as the economic situation worsens, this is expected to shoot up.

The Bank of England forecasts it will rise to 6.5 per cent.

Increases in mortgage costs may be passed on to tenants – putting more people at risk of homelessness

Soaring interest rates mean higher mortgage costs for many homeowners. For landlords with mortgages, these will likely be passed on to tenants.

This could put many at risk of homelessness, warns Rebecca McDonald, chief economist at the Joseph Rowntree Foundation.

“With interest rates reaching their highest point for a generation, people who are already in poverty could be pulled in deeper due to the cost of getting into expensive debt to afford essentials. There is also a larger group of people at risk of being pulled into poverty due to the impact that rate rises have on housing costs,” McDonald said.

Get the latest news and insight into how the Big Issue magazine is made by signing up for the Inside Big Issue newsletter

Almost two thirds of young people fear for their generation’s future – and 1.3 million people are predicted to plunge into poverty by 2023. We’re fighting that with our new campaign: Big Futures.

Sign our open letter here, calling for decent and affordable homes for all, an end to low-wages and for investment in young people, and for millions of green, well-paid jobs.

Advertisement

Become a Big Issue member

3.8 million people in the UK live in extreme poverty. Turn your anger into action - become a Big Issue member and give us the power to take poverty to zero.

Recommended for you

Read All
Cash-strapped council warns it's at breaking point as neighbour places homeless people in its town
homeless peoples' tents in street
Homelessness

Cash-strapped council warns it's at breaking point as neighbour places homeless people in its town

Disabled people losing jobs and 'falling out of work' due to months-long waits for DWP support
disabled person working
Disability rights

Disabled people losing jobs and 'falling out of work' due to months-long waits for DWP support

Homeless families occupy council housing offices on Halloween in plea to fix 'houses of horror'
Homeless families at a protest about council housing
Homelessness

Homeless families occupy council housing offices on Halloween in plea to fix 'houses of horror'

'Back to cost of living crisis': Households will be £770 worse off by next UK election, experts say
woman in supermarket
Cost of living crisis

'Back to cost of living crisis': Households will be £770 worse off by next UK election, experts say

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Citroën Ami: the tiny electric vehicle driving change with The Big Issue
4.

Citroën Ami: the tiny electric vehicle driving change with The Big Issue