• Lord Hammond told that the UK economy will slow significantly in the autumn, but that this is “probably a good thing.”
• He stated that many sectors of the economy are “still not back to normal yet,” thus there will be “bound to be an effect there.”

Lord Hammond has warned that the UK is on the verge of a recession, citing “all the data points that way.”

According to the former chancellor, the country has a “very, very difficult period ahead in the short term.”

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He believes the UK economy would decelerate significantly in the autumn.

Lord Hammond stated that the “enormous government response” constituted the “next part of the cycle that began with the COVID outbreak.”

“To think that we can somehow move on from that, leave the tab on the table and act as if nothing had happened is unrealistic, is naive,” he said.

“There’s now got to be a part of the cycle where we correct for the extraordinary action that was taken during the pandemic.

“And a lot of what we’re seeing at the moment in terms of inflation pressures in the domestic economy is a result of the people having saved quite a lot during the lockdown period and that saving getting released into the economy over the last six months.”

Although the war in Ukraine is one of the causes of inflation, he claims that the problem began long before the conflict, fueled by COVID stimulus packages offered by the UK, US, and other countries.

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Brexit, he claims, has also had an impact on rising prices due to changes in supply networks.

“As we come out of the COVID crisis, supply and demand are out of kilter,” he said.

He stated that many sectors of the economy are “still not back to normal yet,” thus there will be “bound to be an effect there.”