Analysts: U.K. to suffer deeper recession than expected

In the most pessimistic forecast by any major City financial institution, analysts at Capital Economics predicted that the U.K. economy will contract by roughly a quarter of a percentage point in 2009. The economy will suffer from continued fallout from the housing-market slump and a significant increase in unemployment. Chief European economist Jonathan Loynes cited three reasons for the dismal outlook: worse-than-expected news on the domestic economy, dwindling overseas support, and concern that decreased lending to companies and consumers will exacerbate the downturn.

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