A new forecast says the UK faces a 50% chance of a recession and thousands of job losses in a year

A storm is coming.
A storm is coming.
Image: Reuter/Reinhard Krause
We may earn a commission from links on this page.

Bad news about Britain’s economy since the country voted to leave the European Union keeps rolling in. The latest forecast from one of the UK’s oldest economic institutions predicts that over the coming year the nation will lose thousands of jobs and face a 50% chance of recession (pdf).

The forecasts from the National Institute of Economic and Social Research (NIESR) add to the bleak outlook already apparent in surveys and other reports released since June’s referendum on “Brexit.”

NIESR, which is well regarded in the UK and is headed by former members of the Bank of England’s policy-making committee, said additional monetary stimulus, in the form of interest rate cuts and aggressive bond buying, is needed in the coming months. Central bank officials are meeting tomorrow, and are widely expected to lower the Bank of England’s benchmark rate to 0.25%—the lowest in the bank’s 300-year history—and possibly revive its quantitative easing program.

In the second quarter of this year, UK GDP increased by a better-than-expected 0.6%, but analysts are nearly unanimous that growth went into reverse in the third quarter (the economy “will shrink” in the three months to September, NIESR asserts). Prime minister Theresa May announced this week that she is resurrecting Britain’s industrial policy after 30 years in an attempt to reshape the abruptly embattled economy.