ATFXDue to concerns about the risk of economic recession, investment banks have downgraded UK economic growth...

There are risks in investment, please be careful not to be deceived when investing! enter2023In, the consensus on the outlook for the UK economy was too bleak, but an investment bank now accuses economists of being too mild about the prospect of an economic recession later this year. Deutsche Bank has lowered its forecast for UK economic growth while emphasizing concerns about inflation and recession risks.

These factors, including rising interest rates, sustained inflation, slowing global economic growth, and delayed monetary policy tightening, may all bring pressure to the UK economy in the coming years.

Senior European Economist at Deutsche BankSanjayRajaWe expect the UK economy to maintain positive growth this year, with only growth0.3%. But higher interest rates, sustained inflation, slowing global growth, and lagging monetary policy tightening may drag down economic growth in the next two years Deutsche Bank has adjusted2024Year and2025The growth forecast for the year is currently estimated to be0.4%and1.1%, lower than previous expectations.RajaIt is pointed out that higher interest rate expectations, stubborn inflation, and weaker global growth expectations will drag down the UK economy.

It is expected that the effect of high interest rates in the mortgage market will gradually affect household disposable income and business investment, while due to the impact of the United States and the euro(1.0762, -0.0020, -0.19%)The outlook for regional growth is weak, and trade activity may decline.

The study also emphasized concerns about the risk of economic recession.RajaIt is believed that economic models may exaggerate the resilience of the economy, while consensus on the possibility of economic decline may be overly optimistic.RajaIn our view, the risk of economic recession remains high, and we believe that the consensus on the risk of long-term economic slowdown is too moderate

Despite the risks, central banks, including the Bank of England, are still committed to achieving their inflation targets by raising interest rates, even if this poses a risk of economic recession.

In terms of inflation, research by Deutsche Bank shows that the UK is facing inflation issues, and domestic inflation pressure remains high.

Although overall inflation is expected to gradually decrease throughout the year, core inflation and food prices remain high.RajaExpected, this yearCPIWill decrease by approximately5%, to2024By the end of the year, it will slowly decline to the target level.

In terms of monetary policy, Deutsche Bank expects the Bank of England's bank interest rate to reach5.25%. Research shows that inflation and wage growth in the service industry will remain resilient until around the second half of this year, and it is expected to increase from2024Interest rates will begin to be lowered in the second quarter of the year.RajaEmphasizing the era of 'longer and higher' indicates that expected interest rates are at least2026Maintain above neutral level before the year.

Deutsche Bank's research highlights the challenges and risks faced by the UK economy, including slowing growth, high inflation, and the Bank of England's cautious adjustment of monetary policy. As the economic situation evolves, market participants will closely monitor developments to assess their impact on the trajectory of the UK economy.