Deutsche Bank sees UK GDP shrinking 6.5% in 2020; warns of downside risk

FILE PHOTO: General view of the Canary Wharf financial district, as the spread of the coronavirus disease (COVID-19) continues, London, Britain, April 6, 2020. REUTERS/Matthew Childs

(Reuters) - Deutsche Bank said on Monday it expected Britain’s economy to shrink 6.5% in 2020 in what it suggested could be the biggest recession for a century.

The bank said the economy had likely contracted 1.9% in the first quarter and predicted a record 13% drop in the April-June period on a quarter-on-quarter basis.

While Deutsche saw UK growth rebounding swifty, it warned of “downside risks”, hinging on the duration of the economic lockdown.

“For now, we expect growth of COVID-19 cases to peak by around mid-April. Should this prove optimistic, the hit to the economy will likely be more acute than anticipated,” the bank added in a research note.

Reporting by Sujata Rao; Editing by Tommy Reggiori Wilkes