UK: Sharp recession from prolonged lockdown – Standard Chartered

Economists at Standard Chartered Bank lower the 2020 UK GDP forecast to -6.0% (previously -3.0%) and raise 2021 forecast to 4.9% (from 3.0%).

Key quotes

“Even after the lockdown is lifted, we expect only a gradual easing of restrictions, with certain restraints remaining in place through Q2, meaning economic activity will likely stay subdued. As a result, we expect GDP to contract sharply by 3.4% q/q in Q1, followed by a more severe 12.6% in Q2.”

“While we anticipate a GDP growth recovery in Q3 and Q4, we nonetheless revise our growth expectations lower this year and forecast the economy to contract by 6.0% (previously -3.0%).” 

“Stronger economic momentum at the end of the year should help push 2021 growth higher, and we raise our forecast to 4.9% (from 3.0% previously).”

“We remain of the view that an extension of the transition period is likely to be triggered at some point this year but note that it is far from guaranteed.”