The UK is heading for a “long and perhaps quite severe recession”, former Conservative chancellor Ken Clarke has said.
Speaking to BBC Radio 4′s Today programme on Tuesday, the veteran Tory said it was going to “condition everything” the new government did.
“In the course of the next 12 months - over the winter - we’e going to have a hard time,” he said.
“We are plainly likely to enter a long and perhaps quite severe recession.
“Certainly the worst since 1990 and it may be the worst since before that.”
Clarke served as chancellor between 1993 and 1997, as the country recovered from the recession of the early 1990s.
He issued the warning as Liz Truss prepares to takeover from Boris Johnson as prime minister amid fears about the cost-of-living crisis.
Truss, who will travel to Balmoral to accept the role of prime minister from the Queen, is thought to be drawing up plans for a freeze in bills which could cost around £100bn.
The Daily Telegraph reported that among the measures under consideration was a scheme to freeze bills until the next general election in 2024.
The Times suggested the measures could also apply to businesses who energy prices were not covered by the household cap.
And Bloomberg suggested the Truss administration could directly fix a new unit price that households will pay for electricity and gas, with regulator Ofgem sidelined from its role in setting the price cap.
Chief Secretary to the Treasury Simon Clarke, who is expected to be offered a job in Truss’ cabinet, said the incoming PM’s economic plans will be “both responsible and exciting”.
In his farewell speech in Downing Street this morning, Johnson offered his “fervent support” to Truss.