UK likely to encounter a recession in the next one to two years - JP Morgan

The firm notes that:

"If the Fed engineers a sharp growth slowdown or recession, this would spill over to the UK and, combined with a tightening in domestic financial conditions, likely produce a UK recession."

Adding that "given the nature of the UK economy, we see high vulnerability to external shocks beyond the near term and see increasing chances of a recession over the next one to two years".

As for the impact from BOE rate hikes, JP Morgan says that a recession would be more likely if rates topped its long-term forecast of 3%.

It's funny that they see a recession being somewhat Fed-induced. The UK is already struggling amid a cost-of-living crisis and the scarring effects from Brexit, high inflation pressures, and soaring energy costs is set to make things worse in the months ahead. A recession could already be in the works for the UK as soon as this year.