Although the UK has clearly been caught up in the recent turmoil in global financial markets, we do not think a double-dip recession is on the cards. Nonetheless, the disorderly market reaction, if sustained, raises the downside risks to our GDP forecast and increases the chances that the Bank of England will cut interest rates by 25 basis points (bps) from 5.00% to 4.75% in September, rather than in November as we currently expect.
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