Bank of England warns the UK will fall into recession this year

But make no mistake, a forecast such as this, would mean a wrecking ball to the forecasts for government borrowing. Tax revenues would plummet, and spending would increase naturally. Forget about the £30bn room for manoeuvre or “fiscal headroom” we heard so much about. But with this level of energy shock, whoever is in power, would need to prepare further massive consumer support, and feasibly, rescue schemes for the energy sector too. I cannot recall the Bank of England predicting a recession of this length in advance of the event. And that certainly has not happened in the middle of the selection of a new prime minister. It is the sort of forecast that in other circumstances might have prompted an immediate emergency Budget. It may just upend all the plans we have heard so much about.

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