UK economy set for the biggest quarterly contraction since World War 2 – Reuters poll

According to the latest Reuters poll, the UK GDP is likely to contract sharply in the first quarter of 2020, as the coronavirus pandemic weighs heavily on the economy. However, economists do not rule out a rebound in the second half this year.

Key findings

“In a Reuters April 15-22 poll of nearly 80 economists, gross domestic product will contract 13.1% this quarter. That would be the biggest quarterly drop since World War Two.

Only last month, the median forecast was for a modest 0.3% contraction this quarter.

In the worst case, the economy will contract 15.0% this quarter, the median showed, and 11.4% across 2020. The base case was for a 5.0% contraction in 2020 and growth of 4.0% next year.

The most pessimistic base case in the Reuters poll was for a 35% contraction this quarter and for the worst case 40%. Respondents gave a median 100% chance of a recession within a year.

Half of the 22 economists who responded to another extra question said the recovery would be U-shaped. Four said it would be V-shaped, four said tick-shaped while three said W-shaped.

When asked if the central bank was done with announcing new policy measures, over 60% of respondents to an extra question said no, most likely by increasing its quantitative easing programme.”

• GBP/USD battle lines set out ahead of PMIs, US jobless claims — Confluence Detector