Deutsche Bank says the outlook for the UK economy has weakened even further and are looking for:
2023 at -0.5% (their previous expectations was for 0%)
2024 at 1% (no change from previously 1%
DB see:
- Easier fiscal policy should support real disposable incomes
- price pressures expected to be a little more persistent over the next two years
- Tighter financial conditions, however, will offset much of gains in fiscal policy
- A weaker global backdrop will weigh on UK trade
On their Bank of England outlook:
- Increased confidence that fiscal loosening won't be totally unfunded has resulted in some risk premium being taken out from UK rates and sterling.
- we expect the MPC to hike the Bank Rate in November by 100-125bps, we now think the MPC may opt for the lower end of the range (100bps)
- we price out 25bps of risk premium in our previous terminal rate, leaving the Bank Rate peaking at 4.75%, settling in the middle of our 4.5% to 5% range
