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Economic Environment | Is the UK Already in a Recession?
Are we already in the early stages of a recession here in the UK? Lots of businesses will be feeling this is true.
The BBC reports here on how the Bank of England has suggested in its latest report on the health of the UK economy that Britain is probably already in a recession.
A recession is defined as two consecutive quarters (i.e. six months) of falling GDP, with GDP being the main measure of the value of all economic activity.
We'll need to wait for the official GDP data, which is typically reported several weeks after the end of each quarter has ended.
However, the Bank of England expects that Quarter 3 (July to September) will see an overall decline in GDP following a small fall in Quarter 2.
With that in mind, it might seem odd that the Bank has announced yet another increase in their base interest rate, up 0.5% to 2.25%. Interest rates are often associated with attempts to dampen economic activity such as demand from households for goods and services.
Higher interest rates will increase mortgage payments for many households which in turn might lower their disposable income available for demand.
Similarly, businesses with bank loans and other debts are likely to see their interest costs rise too, adding further to their costs.
It's all looking like a pretty tough economic environment for consumers and businesses alike as we approach the final few months of the year.