The news over the last month has done nothing to change expectations of a sharp contraction in the economy this year. Admittedly, the breakdown of GDP in Q4 showed that destocking playing a large part in the 1.5% quarterly fall and this drag should soon ease. But consumer spending, investment and exports all fell heavily too. What’s more, surveys are consistent with GDP contracting by another 1% to 1.5% in Q1. A 3% or so drop in output this year is now widely expected. But we continue to think that expectations of a sharp rebound next year will be disappointed.
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