United Kingdom‘s GDP increased by 0.2% from between April and June, according to official figures. Manufacturing and the lack of a Bank Holiday in June all contributed to the better-than-expected figures.
There is a high possibility that the next UK election will be fought against the backdrop of a recession.
Researchers from the economic think-tank, the National Institute of Economic and Social Research (NIESR), however have forecast a grim out look for the UK.
“Elevated housing, energy and food costs”, it says, will continue into next year, UK GDP will “barely grow”, income inequality will worsen, while unemployment and debt will rise.
There are, in fact, even chances that GDP growth will contract by the end of 2023 and a roughly 60 per cent risk of a recession at the end of 2024.
The UK has been in recession since the banking crisis of 2007, resulting in low economic growth and rising unemployment. Whilst there is now some evidence that the recession may be coming to an end its effects are likely to continue for many years.
Although there is limited research on the impact of the current recession on mental health, there is evidence from previous economic downturns to suggest that the UK is in recession.
What is recession?
A recession is defined as when an economy – as measured by GDP – shrinks over two consecutive quarters, or six months.
When an economy contracts, it is usually a sign that consumers are spending less. This has a knock-on effect on businesses, which produce less in the way of goods and services and spend less on staff.
How does it affect the United Kingdom?
The recession will have an adverse effect on United Kingdom and its citizens. The country’s GDP and economy will cease to grow.
With tight conditions, the businesses and industrial sector will be under tremendous pressure. Unemployment will be on its peak whereas; the cost of living will sky-rocket.
At the current phase of the world, where there are two wars on two different fronts, recession is the worst kind of struggle to handle for any country.
However, many prior reports have denied the chances of United Kingdom facing the threat of recession, new reports have confirmed that either by 2023 year-end or by 2024 third quarter significant impact will be seen in the country due to the recession.
How does United Kingdom’s recession affect India?
United Kingdom’s recession problem could have a significant impact on its relation with India. Roughly 1,50,000 Indian students travel to UK for further education. This would see only 15,000 travel to UK if the situation doesn’t change.
UK is home to more than 7,50,000 Indian employees. Recession results in enormous lay-off and it is anticipated that that 4500-5000 employees will be laid off if the recession does hit UK.
There is a very stable and healthy trade relation which exists between both the countries. India-UK bilateral trade increased to $20.36 Billion in 2022-23 from $17.5 Billion in 2021-22.
Newspapers, printed books, lead, organic materials, essential oils, cosmetics and perfumes are the major imports for India and which account for more than $150 Million. Recession would see a rise in the prices for all of these, leading to a stagnancy to the trade from India.
Recession is not the only problem which UK has on its hands. Lack of public infrastructure, public schools, falling economy, government corporations going bankrupt and most importantly; inflation.
United Kingdom have a whole lot to accomplish let alone to begin with the fact that recession has reached the country’s threshold. In fact, United Kingdom is the only G7 country to have the lowest economic growth rate and to be right in front of recession. Japan is expected to leave the G7 economic growth rate whilst UK will be in the last position.