An economist at Bloomberg Economics, Dan Hanson, wrote in a note released Monday that it would be hard to choose between stagnation and a mild contraction. However, the odds are slightly in favor of the mild contraction. “There is a chance that the drop in output will be a little bigger than we thought.”

Since September, economists thought that GDP would have gone down 0.1%. As of Friday afternoon, a Bloomberg poll showed that this was now true. The BOE thinks that by 2026, unemployment will have gone up from 4.3% to 5.1%.

“People may be less willing to spend because the job market is getting looser,” Hanson said. “This is true even though their real wages have been going up all winter. As of September, the BOE’s money and credit figures showed that people were saving more than they have been before.

Hanson is one of a few economists who thinks the UK will go into a recession. Polls show that output will drop in the second half of the year and the number of job openings will drop sharply.

Bloomberg Economics’ model, which already predicts a mild recession, says there is a 70% chance of a decline in the third quarter. This comes after GDP fell 0.6% in July and only partially rose in August. Last week, the Bank of England said there was a 50% chance of a recession during the time frame of its prediction.

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Hanson explained that the guess comes from a “model that uses high-frequency data and historical experience to capture the distribution of risks around the near-term outlook for growth.”

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