5:02 pm, June 10, 2020
The UK economy could slump by as much as 11.5 per cent in 2020 as the country faces being the hardest hit among the world’s developed countries
The Organisation for Economic Co-operation and Development (OECD) said Britain’s economy was likely to fall by 11.5 per cent in 2020.
Its figures also show the economy could fall by 14 per cent if the country is hit by a second wave of coronavirus.
Its latest global economic outlook shows the UK’s plunge in GDP outstrips even that of other badly impacted European countries 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.
OECD projection for GDP in 2020. See story ECONOMY OECD. Infographic PA Graphics. An editable version of this graphic is available if required. Please contact [email protected].
The OECD said: ‘The crisis will cast a long shadow over the world and OECD economies.
‘By 2021, it will have taken real income per capita in the majority of OECD economies back to 2013 levels in the double-hit scenario, and to 2016 levels in the single-hit scenario.’
The UK’s economy is expected to bounce back by nine per cent in 2021, but in a second wave scenario, the recovery would be slow and painful, with growth of just five per cent in 2021.
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.’
‘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.’
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 expects the world economy to contract 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.
UK activity has suffered particularly badly, because of Britain’s largely service-based economy.
The services sector, which includes financial services, retail, hospitality, real estate and tourism, makes up around three quarters of UK GDP and has been badly impacted by the lockdown restrictions to contain Covid-19.
Downing Street said that in common with many other countries, the UK economy is seeing a ‘significant impact’ from the pandemic.
The Prime Minister’s official spokesman said the government’s top economic priority has been ‘to support people, jobs and businesses through this crisis’.
He added: ‘The unprecedented action that we have taken to provide lifelines that help people and businesses through this economic disruption will ensure our economic recovery is as strong and as swift as possible.
‘What is clear is that if we had not acted in the way that we did at the scale and the speed that we did, the situation would be far worse.’
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