Wednesday February 11, 12:08 PM
UK economy 'to shrink 4-6% in mid-2009'
LONDON (AFP) - The Bank (NASDAQ: TBHS - news) of England said on Wednesday that the recession-hit British economy was set to shrink by 4.0-6.0 percent in the middle of 2009 from the level 12 months earlier, returning to growth in early 2010.
The central bank forecast in a quarterly report that gross domestic product (GDP) would shrink by up to six percent in the middle of this year, if interest rates stay at current levels.
"In the central projection, output continues to contract in the near term, as the weakening labour market and increased uncertainty weigh on consumption, businesses run down inventories and reduce investment, and the weakness in world demand inhibits export growth," the BoE said in a statement.
"The near-term contraction in GDP in the central projection is substantially deeper than envisaged in the November Report.
"Further out, GDP growth recovers as the impact of the sizable policy stimulus both at home and abroad is increasingly felt... and the lower value of sterling shifts both domestic and overseas expenditure towards UK suppliers."
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