Economists at ABN Amro have significantly downgraded the UK GDP forecast as most of the lockdown-related weakness is expected to come in Q2.
“For 2020, we expect the economy to contract by -8.5% (previously: -4.9%), with 2021 revised up on base effects, to 5.2% (previously: 2.3%).”
“Given this very weak GDP outlook, we continue to expect the BoE to increase its QE asset purchases target by at least GBP100bn at the next MPC meeting on 18 June, with the risk that it moves to the unlimited asset purchase model that has been adopted by the Fed.”
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