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Crimson Black Capital: OBR scenario analysis is far too optimistic

Jessica Bird

April 14, 2020

recession

Despite the bleak economic outlook provided in the recent projections by the Office for Budget Responsibility (OBR), the picture created is still too optimistic, according to Crimson Black Capital.

Ayush Ansal, chief investment officer at Crimson Black Capital, said: “For the Office for Budget Responsibility to be pricing in a 35% contraction in GDP during the second quarter brings home the magnitude of the economic fallout that lies ahead for the UK economy.

“As bleak as it is, many market watchers will see the scenario the Office for Budget Responsibility has arrived at as far too optimistic.”

Ansal went on to confirm that it is likely the UK economy will not return to a state of growth immediately after the current crisis is over.

He added: “Markets are increasingly of the view that the impending UK recession is more likely to be L-shaped than V-shaped.

“The sheer extent of the UK’s current economic displacement could lower its growth trajectory for many years to come.

“If the UK can emerge from the pandemic via a U-shaped recession, in many corners that will be considered a victory of sorts.”


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