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According to the latest Reuters poll of economists, the UK economy will at least take two years to return to its pre-coronavirus pandemic growth trajectory, although the Bank of England (BOE) may refrain from adopting negative interest rates.

Key findings

“The economy shrank a record 20.4%. But as many restrictions have been lifted, it was expected to expand 15.1% this quarter.

20 of 23 economists who responded to an extra question said it would be at least two years before that happened. Only three said within two years.

After contracting 9.7% this year – more than most of its peers and more than the 9.1% forecast last month – the economy will expand 6.2% in 2021, the poll of nearly 70 economists predicted. In a worst-case scenario, it will contract 14.2% this year.

While the unemployment rate unexpectedly held at 3.9% in June it was seen peaking at 8.0% in the fourth quarter.

Bank Rate was expected to remain at 0.10% until 2023 at least, forecasts showed, and when asked about the chance of negative interest rates, economists gave just a 22.5% median probability. Only two economists polled had sub-zero rates as their base case scenario somewhere in the forecast horizon.”