The UK economy shrank at the slowest pace in a year in the second quarter, losing -0.4% in the three months to June according to the [B]NIESR Gross Domestic Product Estimate[/B]. In a statement accompanying the release, NIESR said that they estimate “the U.K. economy is now stagnating rather than continuing to contract at a sharp pace,” expecting economic growth to remain elusive until the middle of next year. The comments mirror those of Bank of England chief Mervyn King, who has said the economic recovery may become “a long, hard slog”. Overnight index swaps suggest traders are pricing in virtually no chance that the BOE will change interest rates from the record low 0.5% this week, although 12-month yield forecasts have been trimmed by 25 basis points just over the past week. An expansion of the current 125 billion pound quantitative easing program is also unlikely for the time being considering signs of stabilization in leading economic indicators that have emerged over recent weeks. Indeed, [B]Nationwide Consumer Confidence[/B] rose to 58 in June, the highest reading since October 2008, with only 23% survey respondents expecting the economy will materially deteriorate over the next six months.