The writing is on the wall – a recession is on the way. Data published by the Office for National Statistics today showed that the UK economy contracted in March for the first time this year.

It was, of course, driven in particular by services and manufacturing. Households are now tightening their belts and bracing themselves for a tighter cost of living squeeze. It doesn’t help that a trade war with the EU is looming, the pound has crashed and there’s a war going on.

Gross domestic product (GDP) declined 0.1 per cent between February and March. It follows stagnation in the previous month, the trajectory is in motion for a formal recession – optimistically recognised as two straight quarters of negative growth.

Inflation is set to accelerate from its 30-year high pushed up in large part by energy costs that have soared following Russia’s invasion of Ukraine, China’s failed Covid strategy, container ships in the wrong place globally and many other factors. The FT reports that – “Over the first quarter as a whole, the UK economy expanded 0.8 per cent over the previous three months, boosted by stronger growth in January. However, that was below analysts’ expectations of 1 per cent and down from the 1.3 per cent increase in the previous quarter.

The services sector was always going to be hit first as this is discretionary spending that always falls when householders are facing less disposable income. That area of business slipped 0.2 per cent on the month and was the main contributor to March’s fall in GDP. The motor industry was particularly hard hit. Manufacturing fell on the month by 0.2 per cent.

Markets now expect the Bank of England to raise its interest rate from the current 1 per cent to 2 per cent by the end of the year putting a perceived or real cost to mortgage holders.

Inflation is now predicted to reach double digits putting pressure on buying power as incomes fail to keep pace. By the onset of winter, the economy will likely be in a recession, particularly as heating costs for the average home in Britain is now expected to increase by another £900 in October.

Rishi Sunak is under immense political pressure from his own party to create new tax breaks as the pain of the cost of living crisis ramps up and is reported daily by the media, along with some analysts now forecasting a recession.