Goldman Sachs Warns that Inflation in the UK Could Increase by 22%
Jose Nino
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Goldman Sachs warns that inflation could reach a peak of 22% if energy prices maintain their ascent.
According to a CNBC report, Goldman Sachs’ projection comes at a time when British households are now staring down the barrel of a projected 80% rise in their energy bills in the forthcoming months.
On top of that, the investment bank projects that GDP could fall by 3.4%.
Goldman’s research note was published on August 29, 2022.
According to CNBC, the 80% hike in energy bills has increased the average British energy bill from £1,971 to £3,549 ($4,197) and is creating a veritable cost-of-living crisis.
Overall, gas prices have increased in the UK since early July. Ofgem, the primary regulator for electricity and natural gas in Britain, is set to recalculate its price cap in three months. Goldman did reveal that if prices stay “persistently higher” an additional 80% hike could be in the cards.
“In a scenario where gas prices remain elevated at current levels, we would expect the price cap to increase by over 80% in January … which would imply headline inflation peaking at 22.4%,” Goldman economists projected in the note.
Should energy prices taper off, the UK’s peak inflation could potentially reach 14.8% in January.
On top of that, Goldman argued that the UK was likely to descend into a recession in the fourth quarter. According to its projections, the UK economy could contract by roughly -0.3% in the fourth quarter of 2022. Should these recessionary conditions hold, contractions of -0.4% and -0.3% could be on deck in the first and second quarters of 2023, respectively.
“We now expect the deepened cost-of-living crisis to push the U.K. economy into recession later this year,” the note remarked.
Similarly, Citi predicted last month that UK inflation would hit 18% in January 2023.
As bad as things are in the US, things are worse in other members of the Collective West. Namely, European countries marked by increased interventionism in energy matters. The current crisis in the Collective West is the product of heavy regulations and even more foolish economic war against Russian oil and natural gas.
At some point, people will have to start holding their leaders to account for the negligent policies they have pursued. People’s lives hang in the balance thanks to the Western ruling class’s arrogance and detached form of governance.
The West truly needs a regime change at this point.
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