UK economy to shrink 4.4% this year

LONDON: The British economy will shrink 4.4% in 2009 before recovering in 2010, according to Ernst & Young���s Item Club.

The forecast by the research group, which uses the same economic model as the UK treasury, is worse than the 3.5% contraction predicted in April.

On Monday it will also revise up the prediction for 2010 to show the economy expanding 0.5% instead of shrinking 0.1%.

UK gross domestic product plunged by the most in a half-century in the first quarter, prompting the central bank to cut interest rates to a record low and start buying assets with newly created money.

Bank of England deputy governor Charles Bean said last week that the economy may return to quarterly growth by the end of this year.