U.K. And Related ETF Forecast For Contraction

The United Kingdom’s economy may be downsizing, meaning related exchange traded funds (ETFs) could be poised to follow suit.

The Organisation for Economic Cooperation and Development forecast that Britain will shrink 1.1% in 2009, and unemployment will rise, Reuters reports.

This would be the biggest contraction since 1991 for the United Kingdom’s economy. The credit crunch and the global financial meltdown has thrown out the notion that 2009 would bring more growth, report Mark Deen and Jennifer Ryan for Bloomberg.

The OECD predicted that housing prices would bottom out in the second half in 2009.

A possible turnaround toward growth may be expected in 2010, as many analysts in Britain are thinking the recession will not be as long or deep as originally thought. Darling estimated in March the economy would expand between 1.75% and 2.25% this year and between 2.25% and 2.75% in 2009.

• iShares MSCI United Kingdon (EWU), down 53.3% year-to-date

• NETS FTSE 100 Index (LDN), down 42.4% year-to-date

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