UK economy predicted to be hardest-hit as coronavirus pandemic brings global slump

0
82


The UK economy is set to be the hardest hit among the world’s developed countries because of the coronavirus pandemic, a major international study has warned.

The Organisation for Economic Co-operation and Development (OECD) said Britain’s economy was likely to slump by 11.5 per cent in 2020 – but could shrink even further by 14 per cent if there is a second wave of Covid-19 later this year.

Its latest global economic outlook shows the UK’s plunge in gross domestic product (GDP) outstripping even that of other badly impacted European countries, in a “single-hit scenario”, with falls of 11.4 per cent expected in France, 11.1 per cent in Spain, 11.3 per cent in Italy and 6.6 per cent in Germany.

The US is on course for its economy to shrink by 7.3 per cent in 2020, and 2.6 per cent in China, the OECD said.

The global economy is expected to shrink by six per cent this year, with all countries suffering a deep recession, and cautioned that the recovery will be slow and “possibly interrupted”.

It predicts global GDP to recover with a 5.2 per cent rise in 2021.

The UK’s economy is expected to bounce back by nine per cent in 2021, but in the second wave scenario, the recovery would be slow and painful, with forecast expansion of just five per cent.

It said UK activity has suffered particularly badly, because of Britain’s largely service-based economy.



OECD projection for GDP in 2020

The services sector, which includes finance, retail, hospitality, real estate and tourism, contributes around three quarters of UK GDP and has been badly impacted by the lockdown restrictions.

However, many countries face massive government debt as they seek to offset the economic effects of the pandemic.

OECD chief economist Laurence Boone said: “Both scenarios are sobering, as economic activity does not and cannot return to normal under these circumstances.

“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”

She added: “Extraordinary policies will be required to walk the tightrope towards recovery. Even if growth does surge in some sectors, overall activity will remain muted for a while.”

Shadow chancellor Anneliese Dodds said: “Today’s evidence from the OECD is deeply worrying, showing the UK was particularly exposed when the coronavirus crisis hit.

“The Government’s failure to get on top of the health crisis, delay going into lockdown and chaotic mismanagement of the exit from lockdown are making the economic impact of this crisis worse.”



Source link

قالب وردپرس

LEAVE A REPLY

Please enter your comment!
Please enter your name here