Unprepared UK facing highest risk of recession since 2007

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Published: July 14, 2019 10:04:00 AM

The risk of a U.K. recession is at its highest level in more than a decade, according to the Resolution Foundation.

Resolution calculates that the past five recessions cost an average of one million jobs in the U.K.

The risk of a U.K. recession is at its highest level in more than a decade, according to the Resolution Foundation. Using yields on government bonds as a measure, the think tank sees the greatest likelihood of a deep slump since just before the financial crisis.

The decline of the pound, a widening current account deficit, and poor economic growth are also all worrying signs of what’s to come, according to the report “Failing to plan = Planning to fail” released on Sunday.

Resolution calculates that the past five recessions cost an average of one million jobs in the U.K. The last financial crisis would have been 12% worse, equivalent to 8,000 pounds ($10,000) per household, without a strong response from the British government and financial sector.

Today, the U.K. is far less prepared than in 2008 to deal with the consequences of a recession, the think tank said. The current economic climate has blunted tools such as slashing interest rates, quantitative easing, and cutting value-added tax.

“While recessions differ in terms of the cause and effect, they are all uniformly bad for living standards,” says James Smith, Research Director at the Resolution Foundation. “Policy makers can’t prevent recessions from happening, but they can limit their damage with the right policy response.”

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