A recession is likely to hit the UK by the end of this year.
That is the warning from Hampshire County Council’s chief executive Carolyn Williamson, who believes a nationwide recession is imminent.
A recession is declared following two successive financial quarters of negative economic growth, sparked by a drop in consumer spending.
Ms Williamson says the Covid-19 pandemic, coupled with a cost of living crisis and the ongoing war in Ukraine, has put a recession on the horizon.
She said: “Rising geopolitical tensions, sky rocketing energy prices and inflation, and the emergence of the cost-of-living crisis are driving our economy into a very sharp slowdown if not an outright recession later this year or early next year.
“The Russian invasion of the Ukraine is another shock to an economy that has only just returned to its pre-pandemic position and one that was already being disrupted by the Omicron variant, supply bottlenecks, and rising inflation.
“With inflation outpacing earnings and taxes rising from April, real living standards are set to fall at the fastest pace since records began in the mid-1950s.”
The news comes as CPI inflation reached a 30-year high in March, with inflation rates expected to hit 10 per cent at some stage this year.
Young people will be the most at risk from a recession due to their lower wages, Ms Williamson added.
However, staff shortages across the majority of industries mean lay-offs are less likely.
“The difficult year ahead might have been more manageable if it came on the back of a living standard boom,” she said.
“But Hampshire’s poorest households and young people are more vulnerable given that they spend a greater share of their income on necessities like food and energy.
“Limited supply of workers will probably mean that we will not see a sharp increase in unemployment, but people employed in consumer-facing services such Hampshire’s young people and older workers are nevertheless far more exposed to any downturn in consumer spending.”
As chief executive of the county council, Ms Williamson has prepared a report on how to deal with the recession, which will be presented to the cabinet this week.
Her stance is that economic development via the county deal, Solent Freeport and opportunities arising from Southampton’s City of Culture bid will stabilise Hampshire through a recession period.