In his Autumn Statement the Chancellor, Jeremy Hunt, said that the Office for Budget Responsibility had judged the UK to be in recession, “like other countries”. In one sense this is true: the post-Covid supply chain crisis and the war in Ukraine have indeed caused economic turmoil around the world.
But the economic slumps faced by most countries are small compared to that of the UK. In 2023 just three of the 27 EU countries – Germany, Sweden and Latvia – are expected to experience declines in GDP, according to the European Commission. The declines will be 0.6 per cent, 0.6 per cent and 0.3 per cent respectively – much less severe than the 1.4 per cent contraction the OBR predicts for the UK.
The UK’s particularly severe downturn has been attributed to both the impact of Brexit and Liz Truss’s calamitous “pro-growth” mini-Budget, which led to a spike in interest rates and a further decline in economic confidence. As ever, it will be ordinary citizens who bear the brunt of the recession. The combination of a shrinking economy and renewed austerity has led the OBR to forecast a drop in living standards of 7.1 per cent over the next two years, the largest fall since records began in the 1950s.