These are tough times for the UK economy - a long, shallow recession is the main forecast at the moment - but there are big risks ahead especially if house prices fall by more than 10% and if the steep drop in real disposable income leads to a deeper cut in household spending - leading unemployment to climb by nearly half a million and many businesses to scale back their capital investment plans.

The last time the U.K. was in recession was during the 2008 global financial crisis but how bad will 2023 for the size of the world’s sixth largest economy?

It is highly likely that the UK economy is already in a recession. The economy will shrink by 2%, driving up unemployment by 505,000 by the second half of 2024. Real GDP will only reach its pre-pandemic level by the end of 2024.

The OBR forecasts that a 2023-24 recession will wipe out 8 years of living standard growth – real disposable incomes are set to fall by more than 7% over the next two years.