A recession and more policy action is coming

As it seems increasingly inevitable that a further spread of the coronavirus will have a significant impact on the economy, we are changing our forecasts. We now expect a recession that will involve something like a 2.5% fall in GDP and trigger interest rates being cut from 0.25% to 0.10% and a resumption of quantitative easing. This extra stimulus and the other measures announced by the Bank of England and the Chancellor this week should help the economy rebound later this year and in 2021.