Goldman Sachs lowers euro zone growth forecast; sees no growth for UK

[March 20, 2023]  (Reuters) - Goldman Sachs lowered its 2023 economic growth forecast for the euro zone on Monday, citing ongoing stress in the global banking system and an increase in economic uncertainty.  

Workers cross London Bridge with Tower Bridge seen in the background, during the morning rush hour in London, Britain, March 10, 2023. REUTERS/Toby Melville

The investment bank said it sees a 0.3% hit to the euro zone's real gross domestic product (GDP), reducing the growth forecast to 0.7% for 2023.

It added that it sees no economic growth in UK this year and no longer expects the Bank of England (BoE) to hike its policy rate in May, leaving its terminal rate forecast for BoE at 4.25%.

Global financial markets have been rattled by the collapse of some regional U.S. banks and the larger Swiss lender Credit Suisse, along with interest rate hikes by major central banks.

Goldman Sachs said there might be a tightening in bank lending by around 10 percentage points in both the euro area and the UK, due to banking stress and rise in financial spreads.

(Reporting by Siddarth S in Bengaluru; Editing by Varun H K)

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