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UK Sellside GDP Views (Low to High): 3/3

UK DATA

Daiwa

  • “We currently forecast a sizeable decline in growth in GDP in June of a little more than 1%M/M, to leave total economic output down 0.1%Q/Q in Q2 following an increase of 0.8%Q/Q in Q1, with household consumption and business investment likely to have contracted. Not least given sizable revisions to the monthly data over recent months, the additional bank holiday in June and transport sector strikes at the end of the month, there is greater uncertainty surrounding the growth forecast last quarter. Within the detail in June, we expect supply bottlenecks and subdued demand to have weighed on manufacturing production, with services activity also expected to contract despite the warmer weather.”

NatWest Markets

  • “The risks around our -0.9% m/m GDP forecast are tilted to the downside. A contraction in Q2 would inevitably fuel worries of an earlier, more acute recession. Although we think a technical recession in Q2/Q3 2022 will be be narrowly avoided, we do now expect a deeper and more prolonged downturn with full-year GDP contractions of -0.2% in 2023 and -0.4% in 2024 as excessive monetary policy tightening compounds the effects of the enrgy price shock on demand.”

Nomura

  • “Both a top-down (i.e. using the OECD’s weekly GDP tracker) and a bottom-up (i.e. line-by-line review of the GDP components) analysis suggest a more modest rise in output [than the 0.5%M/M seen in May]. We forecast a 0.1% m-o-m rise to leave GDP 0.2% q-o-q higher in Q2 versus Q1.
  • Still, we see GDP contracting during the following four quarters which should – in our view – bring the BoE’s tightening cycle to an end by the end of 2022 and require modest rate cuts from the spring of next year.

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