The U.K. economy contracted in the three months to January, supporting the case for the Bank of England to boost its bond-purchase program, the National Institute of Economic and Social Research said.
Gross domestic product probably fell 0.2 percent, compared with a contraction of the same amount in the fourth quarter, Niesr, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement in London today.
While the estimates don’t confirm that the U.K. is in a recession, they suggest no growth since October 2011, Niesr said. The Bank of England increased its target for bond purchases by 75 billion pounds ($119 billion) to 325 billion pounds today to shield the economy from turmoil in Europe.
“There are significant downside risks to the U.K.’s outlook this year, not least those associated with the evolution of the euro-area crisis,” Niesr said. “A further round of quantitative easing appears necessary in order to boost demand in the short term.”