Stagnant wages could push Britain into recession within a year, economists warn

Britain could be pushed into a recession this coming year, economists have warned.

Stagnant wages combined with inflation are expected to lower consumer spending, the key driver of UK economic growth since the Brexit vote.

Leading economic forecaster Fathom Consulting has warned that with consumers "under assault" there is now "greater-than-evens chance of a technical recession in the UK over the next year".

The warning comes days after inflation suffered a surprise fall in June, dropping from its highest level since the Brexit vote.

The UK's Consumer Price Index (CPI) inflation rate dropped to 2.6% in June, down from 2.9% in May.

"Falling prices for motor fuels and certain recreational and cultural goods and services were the main contributors to the fall in the rate," the Office for National Statistics (ONS) said.

But Fathom said that inflation has "merely paused for a breath" and is expected to rise again later this year. The forecaster warned that if wages do not rise in line with inflation "consumers' real purchasing power is reduced."

Economists at Credit Suisse have also said that there is a roughly one in three chance that the British economy will spiral into recession in the upcoming months.

In a note to their clients they said that a recession is "not our central scenario but the risks are increasing."

"The volatile backdrop and unpredictable Brexit negotiations have increased the uncertainty of our forecasts," they added.

Second-quarter GDP figures, released later this week, are expected to reveal the economy's stagnation since last year.

The economy grew just 0.2% in the first three months of this year, making Britain the slowest growing economy in the European Union.

Analysts expect growth of 0.3% in the second-quarter, significantly weaker than last year.