Recession may be deeper than BoE thought, says economist

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Recession may be deeper than BoE thought, says economist

Mon 16th Feb 2009

An economic analyst has claimed that the recession may be deeper than the Bank of England (BoE) has predicted.

Simon Ward, an economist for New Star investment management, claimed that GDP has fallen by around 3.1 per cent since its peak in the second quarter of last year, which implies that this recession is already deeper than those in 1974-5 and 1990-91.

He added: "The bank's forecast suggests a further reduction of only 0.8 per cent before a trough is reached, which may prove to be an underestimate given current negative momentum."

Mr Ward said that the Bank of England's prediction that the economy may start to recover after the third quarter of 2009 could be correct, but claimed that its estimates of the speed of recovery may be "optimistic".

Recently Japan, home of the world's second-largest economy, released data which showed a 3.3 per cent contraction in the fourth quarter of 2008 - a decline more dramatic than many analysts expected.

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