On June 30, it was reported that Sonali punhani, chief UK economist of Credit Suisse, said when releasing the team's latest forecast for the UK economy: "the UK may avoid recession this year."
Punhani said that the government's financial support accounted for 1.5% of GDP, the surplus savings of consumers accounted for 9.8% of GDP, and the tight labor market should promote the recovery of service industry expenditure, so as to prevent this year's economic recession.
According to the British National Bureau of statistics, the UK economy grew 0.8% month on month in the first quarter of 2022, in line with economists' expectations, with a year-on-year growth of 8.7% in the first quarter.
However, soaring inflation and sluggish consumer confidence have led economists to lower their expectations for the UK's economic performance for the rest of this year. The Bank of England warned in May that the economic recession may sweep the UK before the end of this year.
In fact, Credit Suisse and other banks predict that UK economic activity will contract by 0.4% in the second quarter.
However, with the recovery of the impact of bank holidays in the previous quarter, it should return to a month on month growth of 0.3% in the third quarter.
In order to celebrate the 60th anniversary of the Queen's accession to the throne, the British government added additional bank holidays in June, which will naturally lead to a slowdown in economic growth.
Credit Suisse believes that the economic growth shrank slightly in the fourth quarter, at 0.1%.
"Technical recession" refers to two consecutive quarters of negative growth, but it is clear that the economy is expected to slow significantly.
Punhani said: "with the disappearance of temporary fiscal stimulus measures in the second half of 22 years, the continuous stagnation of real income, coupled with the tightening policy of the Bank of England and the slowdown in the growth of trading partners, the GDP growth rate will reach 3.4% in 2022 and then fall to 0.5% in 2023." She added: "given that we expect growth to be close to stagnation, the risk of a recession in 2023 has increased."
The three risks that could lead to a recession are
(1) Before the end of the year, the Bank of England will raise interest rates more aggressively to more than 3%
(2) Any impact that pushes the eurozone into recession
(3) If the UK PMI falls below 45
Credit Suisse predicts that the Bank of England will further raise interest rates by 100 basis points in 2022, reaching 2.25% by the end of 2022, which is not as large as the market expected. At present, the market expects the Bank of England to raise interest rates by about 160 basis points.