The UK is set to enter a recession which will hit millions of the most vulnerable households, especially in the worst-off areas, a new economic report has warned.
Gross domestic product is set to shrink in the third and fourth quarters of this year, and in the first three months of next year.
It said the threat of stagflation, a nightmare of economists, has returned for the first time since the 1970s. Stagflation is where an economy sees slow growth, high unemployment and rising prices. The institute also says the number of households living pay cheque to pay cheque will nearly double from 3.9 million to 6.8 million – or 25% – in 2024. The report found that inflation will peak around the last three months of this year. Consumer price index inflation will reach close to 11%, but will fall back to 3% by the end of 2023.
The report called for the Government to increase universal credit payments by £25 per week for at least six months from October, which would cost around £1.4 billion, and also to increase energy bill relief payments from £400 to £600 for 11 million low-income households, costing £2.2 billion.
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