Tough times ahead for UK Economy
The Office for Budget Responsibility (OBR) have said that the economy could decrease by as much as 35% by June. It is important to say that this is only one possible scenario. The figures from the OBR show the scale of the impact that COVID-19 is having on the UK economy, other countries are also having similar implications.
Chancellor Rishi Sunak has said that the government is unable to protect everyone during this crisis. “We came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.” However, statistics have shown that unemployment rate could increase to 10% and the government’s deficit could hit £273billion. This economic impact will only be temporary shift and much of the crash will be undone as built-up demand is expected to be unleashed when lockdown is lifted.
These predictions are based on a three-month lockdown followed by a period of three months of partial restrictions the OBR have said. Based upon this the economy would shrink by 12% this year, but growth is expected to return pre-crisis trends by the end of the year.
Even though the government’s borrowing is expected to rise to £273bn the OBR have said that this financial aid could help prevent any long term damage for employees and businesses. Which is crucial to get the economy back up and running again once lockdown is lifted, as unemployment is predicted to rise to 3.4 million by the end of June and increase of 2.1 million.
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