According to a research note released by the investment bank, headline inflation could peak at 22.4 percent and the gross domestic product could drop by 3.4 percent if wholesale gas and electricity prices continue to spiral over the winter.
In a scenario where prices "remain elevated at current levels," economists at the bank said the Office of Gas and Electricity Markets, the government regulator for the electricity and downstream natural gas markets in Great Britain, energy price cap for household bills could rise by more than 80 percent in January, which would "imply headline inflation peaking at 22.4 percent."
Goldman economists, led by Sven Jari Stehn, also said the U.K. is likely to fall into a recession in the fourth quarter as they forecasted the economy to contract by -0.3 percent on a non-annualized basis in the fourth quarter of this year, followed by -0.4 percent and -0.3 percent in the first and second quarters of 2023, respectively.
"We now expect the deepened cost-of-living crisis to push the U.K. economy into recession later this year," Goldman added in the note.
Meanwhile, Goldman's outlook is the latest gloomy forecast for the British economy, with U.S. bank Citi predicting that U.K. inflation is set to peak at 18 percent at the start of 2023.
As per the U.K. Office of National Statistics, inflation rose above 10 percent for the first time since the early 1980s in July. This was fueled by surging wholesale energy prices and the rising cost of basic essentials. Inflation hit a post-war record of 24.5 percent in August 1975.
People in the U.K. are fed up with soaring energy costs and as of press time, more than 130,000 people have pledged not to pay their electric bills when prices jump again. (Related: At least 75,000 Brits to stop paying utility bills in response to unfettered inflation.)
"If the government and energy companies refuse to act, then ordinary people will! Together we can enforce a fair price and affordable energy for all," Don't Pay U.K., an anonymous group leading the effort to have more than one million Brits boycott paying their power bill by October 1, said via a tweet.
According to the group's website, they are a movement against the rise in energy bills and they demand a reduction in energy bills to an affordable level.
The organization's plan is to gather a million people to pledge not to pay if the government goes ahead with another massive hike on October 1.
"Mass non-payment is not a new idea, it happened in the UK in the late '80s and '90s when more than 17 million people refused to pay the Poll Tax – helping bring down the government and reversing its harshest measures," the group wrote in its website.
"I think I can categorize it more accurately now, the big movement that I am seeing is an increase of growth in people calling for a non-payment of energy bills, mass non-payment. Effectively a consumer strike on energy bills and getting rid of the legitimacy of paying that," British financial broadcaster Martin Lewis said.
He added that once it starts becoming socially acceptable not to pay energy bills, "people will stop paying energy bills and you're not going to cut everyone off."
Watch the video below where a former government official warns inflation will take "years, not months" to cool off.
This video is from the NewsClips channel on Brighteon.com.