An economic recession in the UK would reduce overall EU demand for EU Emissions Trading Scheme carbon allowances as banks move away from high-risk lending models used to finance EUA deals, Barclays Capital Carbon Market Research Director Trevor Sikorski said this month. Sikorski's remarks came in response to a Bank of England statement on November 12 that the UK economy is probably already in a recession as the fallout from the global financial crisis continues. "The economy probably entered recession in the second half of 2008 and output is likely to contract further," the bank said in its third-quarter report. And while many experts claim that the UK will be one of the EU member states hardest hit by a potential forthcoming economic recession, Sikorski said that a downturn in UK industrial activity would only impact the global carbon market in the short term.
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