Proactive Investors - The UK will avoid recession – but for up to 7 million Britons it will still feel like the economy is in reverse gear.
That at least is the headline from research by the respected National Institute of Economic and Social Research (Niesr).
Although the country may avoid a technical recession, characterised by two consecutive quarters of contraction, Niesr has warned that the rising cost of living will still make life tough for lower-income households, especially in the North East, Scotland, Wales and Northern Ireland.
One in four UK households, or 7 million families, will struggle to pay their energy and food bills this financial year, while middle-income households will see a 7% to 13% decrease in disposable income, amounting to up to £4,000 this year.
The think tank says fewer people will be able to retire early and more workers between the ages of 50-64 will return to the workforce, as the government considers ways to bring retired middle-aged workers back to boost the economy.
Niesr’s assessment of the nation’s economic prospects is slightly more bullish than that of the Bank of England, which is expecting a short, sharp contraction.
The International Monetary Fund (IMF), meanwhile, reckons the UK will perform worse than any other advanced economy, including Russia.
However, economists have a track record of being wrong in their predictions, with the IMF correctly forecasting only 10% of recessions a year ahead of time between 1992 and 2014, the BBC pointed out.