Britain is headed for a recession that could stretch until mid-2024, economists warn
The economy shrank between July and September and inflation is at a staggering 10.1%
Permanent job placements are falling for the first time in nearly two years as businesses get nervous
Read below to find out how the looming recession could affect you
The UK has taken an unwelcome step towards what the Bank of England has warned could be its longest recession in 100 years as the country continues to battle soaring inflation.
On Friday, it was announced the economy had shrunk by 0.2% between July and September with declines in manufacturing, retail and the bank holiday for the Queen's funeral all taking its toll.
In a bid to get surging prices back under control and reduce the cost-of-living crisis, the central bank has been raising interest rates, which increases the cost of borrowing and encourages people to save instead of spend.
The Bank's chief economist Huw Pill says there is "still more to do" to tackle persistent inflation, after the base rate of interest was raised to 3% last week - the single biggest rise since 1989.
There is a chance it could raise rates again in December, despite this potentially worsening a prolonged recession expected to grip the UK.
So what do these dire economic warnings actually mean? Here, Yahoo News UK explains how people's everyday lives will be affected.
What is a recession?
A recession is period of significant economic decline, with lower industrial production or business activity and rising unemployment.
This doesn't apply to very short periods, and most economists use the definition of two consecutive quarters of falling Gross Domestic Product (GDP), the value of all goods and services a country produces.
Recessions may last for as little as a few months, however they can also be very persistent and can stretch for years.
Is the UK in a recession?
Britain is not officially in a recession yet, but it is approaching one, with GDP estimated to have fallen by 0.3% in the three months to August, according to the Office for National Statistics.
The Bank of England's Monetary Policy Committee has warned the UK economy faces a "challenging outlook" as it approaches a "prolonged recession".
It cites a number of factors behind this including a huge hike in energy prices contributing to inflation, which is currently at 10.1% and putting pressure on households.
The committee says GDP is projected to continue to fall throughout 2023 and 2024, as high energy prices and materially tighter financial conditions weigh on spending.
It wasn't that long ago that the UK was last in a recession, with the economy tumbling in 2020 during the height of the COVID-19 pandemic.
As hospitality venues and shops were forced to close to stop the spread of the virus, hundreds companies went out of business and many people lost their jobs, as the UK's GDP fell by 20.4% between April and June 2020.
What does that mean for me?
The UK entering a recession is likely to mean more job losses, as people spend less money and businesses struggle to stay afloat.
Currently unemployment is at 3.5% - its lowest rate since 1974 - but the Bank of England predicts it to rise to 6.5% in the next two years.
The number of people placed into permanent jobs by recruitment agencies has fallen for the first time in 20 months, according to new research by the Recruitment and Employment Confederation.
A survey of 400 recruiters found many mentioned that heightened economic uncertainty had led some employers to reassess their recruitment plans, while candidate shortages also affected hiring plans.
With companies trying to keep their costs down, they are less likely to offer pay rises or promotions, even though many people may be seeking them to cope with rising inflation.
The cost of living crisis means many Britons are already feeling a squeeze on their standard of living, an a recession is likely to make this worse for many people.
Currently, the Bank expects inflation to fall back from the middle of next year towards the 2% target in two years' time.
To make matters worse, chancellor Jeremy Hunt is set to announce at least £35 billion in cuts as he seeks to plug a black hole in the Treasury's finances, so people can also expect cuts to public services.
The recessions of the early 80s and early 90s were characterised by large falls in employment and contributed to income inequality, so the same is likely to happen again as people lose their jobs.
Head of Education, Skills and Productivity at KPMG, Claire Warnes, added: “The looming recession is clearly impacting the UK jobs market.
"Employers’ caution in hiring combined with fewer available candidates has resulted in the number of permanent placements falling for the first time in nearly two years.
“Now more than ever, it’s essential that we focus on upskilling the workforce to support and boost economic recovery when it comes.
"The jobs market will bounce back, particularly if we invest in the skills of the workforce across all sectors of the economy.”
Meanwhile over five million households are set to see their monthly mortgage bills increase sharply over the next two years, by an average of around £3,900, according to the Resolution Foundation.
The think tank's research director James Smith said: "Everyone will be affected by prolonged double-digit inflation, but poorer households will be hit hardest by the surge in food prices and energy bills.
“This provides a sobering backdrop for the Autumn Statement, where the Government will need to both calm the markets, while also protecting households from the worst of the cost-of-living storm.”