The UK economy is likely to enter a mild recession next year on the back of a sharp deterioration in the external environment and the cost of living crisis, the global advisory services firm KPMG said Monday.
The economic growth is forecast to slow to 3.2 percent in 2022 as the invasion of Ukraine and renewed lockdowns in China put upward pressure on commodity prices and keep supply chains under strain, KPMG said in its UK Economic Outlook.
The growth is projected to slow further to 0.7 percent next year due to the fallouts from geopolitical tensions.
"We expect growing external headwinds and weakening domestic momentum to see economic growth slow significantly over the next year, with a significant risk of a mild recession," Yael Selfin, chief economist at KPMG UK said.
The agency said the Bank of England could adopt a more gradual uplift in interest rates than the current market expectations, with two further hikes expected this year.
