The UK recession is expected to last until the end of next year, with households cutting back on spending, according to experts.
It comes as families and businesses across the country struggle with soaring energy costs and rising inflation.
Experts predict a “sharp reduction” in spending on non-essential items by those who are most impacted by bills increasing.
A technical recession is defined as at least two consecutive quarters of contraction in the economy.
The UK economy is on track to shrink by 1.3% in 2023, having already entered a “shallow but protracted” contraction.
Yael Selfin, chief economist at KPMG UK, explained that the economic forecast could be more positive if the cost of energy was to fall.
“Households are expected to rein in spending on discretionary items in 2023 in response to the squeeze on income,” he said.
“As consumers cut back on spending, we anticipate a sharp reduction in non-essential categories of spend by those households most affected by the rise in energy and food costs, including spending on eating out and entertainment.
“The outlook could turn more positive, particularly if energy costs drop back to previous levels.
“However, risks are probably skewed to the downside, given the state of public finances as well as some companies’ balance sheets, which could make it harder for them to absorb any potential further shocks in the short term.”