UK economic recovery to take at least two years to reach pre-pandemic levels

According to the latest Reuters poll of economists, the UK economy will at least take two years to return to its pre-coronavirus pandemic growth trajectory, although the Bank of England (BOE) may refrain from adopting negative interest rates.

Key findings

“The economy shrank a record 20.4%. But as many restrictions have been lifted, it was expected to expand 15.1% this quarter.

20 of 23 economists who responded to an extra question said it would be at least two years before that happened. Only three said within two years.

After contracting 9.7% this year - more than most of its peers and more than the 9.1% forecast last month - the economy will expand 6.2% in 2021, the poll of nearly 70 economists predicted. In a worst-case scenario, it will contract 14.2% this year.

While the unemployment rate unexpectedly held at 3.9% in June it was seen peaking at 8.0% in the fourth quarter.

Bank Rate was expected to remain at 0.10% until 2023 at least, forecasts showed, and when asked about the chance of negative interest rates, economists gave just a 22.5% median probability. Only two economists polled had sub-zero rates as their base case scenario somewhere in the forecast horizon.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.