UK economy

Small business owners such as Claire Tasker are already being hit as consumers cut back on non-essentials.

GDP is forecast to fall by between 8% and 10% in 2022, the biggest annual drop since immediately after the collapse of the Soviet Union in the 1990s. Growth slowed to 0.2% in January-March, from 0.3% in the fourth quarter of 2021. Germany recovered from a contraction in the final months of last year but the French economy stalled, Italy shrank and Spanish growth slowed. The world’s biggest economy unexpectedly shrank in the first quarter. The Bank wants to prevent persistently high inflation from taking root but economists warn there is a risk that increasing borrowing costs will add to the problems facing business and households when the economy is already faltering. “A mild recession and/or modest fall in house prices may not deter the Bank too much if price pressures remain strong. Consumer spending could be propped up by more than £200bn of savings built up by households in the pandemic. What Tasker is experiencing in Hitchin is a microcosm of the broader economy. If the economy does slip into recession, the Treasury and the Bank of England will be blamed for making policy errors. Even economists less gloomy than Blanchflower accept that the risks of a recession have risen in recent months. The OBR and the IMF forecast a marked slowdown in 2023 but the bad economic news has arrived sooner than expected. “The cost of living is affecting me, too.