UK gross domestic product (GDP) has fallen 0.1% every month since February
The British think tank National Institute of Economic and Social Research (NIESR) has predicted a recession for the UK in 2022.
The cost of living crisis has seen the UK economy grow at its slowest rate in a year, with March figures making for strong reads.
The Office for National Statistics (ONS) said gross domestic product (GDP) fell 0.1% on a monthly basis after growth stalled in February.
UK GDP is currently at 0.7% and has prompted fears of another recession on the horizon as inflation rises.
Here’s everything you need to know about what a recession is and how long it might last.
What is a recession?
A recession occurs when a country experiences an economic decline.
The wealth of the United Kingdom is calculated using its GDP.
If the GDP rate falls, as it has in recent months, the economy will contract.
When GDP falls for two consecutive quarters (six months), it is called a recession.
Is Britain in danger of a recession?
British think tank NIESR forecast on May 11 that Britain would fall into recession.
The current GDP rate of 0.7% has been falling every month since February.
Households are feeling the strain as the cost-of-living crisis sends interest rates up to 30-year highs.
Chancellor Rishi Sunak blamed the war in Ukraine for Britain’s slow recovery.
Sunak said: “Our recovery is being disrupted by Putin’s barbaric invasion of Ukraine and other global challenges, but we continue to help people where we can.”
What happens in a recession?
In a recession, the economy struggles as a country’s wealth has shrunk due to low GDP.
This means some businesses may have to find ways to save money and people could lose their jobs.
With rising inflation rates, people find that their wages no longer cover everyday necessities such as petrol, electricity or heating costs.
During the last major recession in 2008, the unemployment rate peaked at 10%.
How long does a recession last?
The length of a recession depends on the measures taken by the government to revive the economy.
Corresponding Forbes Magazinethe average US recession lasts 11 months.
After the 2008 recession, it took the UK five years to get its economy back to pre-impact size.
When was the last UK recession?
The UK most recently went into recession in August 2020.
Due to the Covid-19 pandemic, businesses closed, many people lost their jobs and GDP fell by 20.4%.
The most famous recession to hit Britain was the 2008 crash.
The so-called Great Recession was caused by rising energy prices and the collapse of the real estate market.
This recession lasted five quarters and was the longest since World War II.
The 2008 downturn was global and affected all G7 countries.
Big companies went bankrupt overnight, from Lehman Brothers to the Royal Bank of Scotland, which had to be bailed out by the British government.