The UK’s economy is expected to shrink by 8 percent this year due to the coronavirus pandemic, and it is unlikely that the economy will recover to pre-Covid-19 levels until 2023, according to a leading economic forecaster.
Official figures showed Britain’s economy shrank by a record 20.4 percent in April, indicating that the region is on its way to witness its worst recession in the last three centuries.
Mark Gregory, EY UK’s chief economist told the media, “This is an undoubtedly challenging environment for businesses and forecasting is extremely difficult. We’ve made some significant adjustments to our GDP expectations compared to what the data told us just six weeks ago.”
The EY report further revealed that consumer spending could slump 17 percent in the second quarter and by 8.7 percent over the year as a whole – before rebounding in 2021.
In the month of April, The Organisation for Economic Cooperation and Development announced that it expects the UK economy to shrink by more than any other developed country as businesses struggle to recover from the pandemic. It estimates that UK’s GDP will contract by 11.5 percent in 2020 and if the UK witness a second wave of the virus attack, GDP will contract by 14 percent.
The World Bank also predicts that the global economy will shrink by 5.2 percent this year due to the pandemic.
Economic activities in advanced economies are forecasted to contract by 7 percent this year as domestic demand and supply, trade, and finance have been severely disrupted due to the lockdown measures introduced to curb the spread of the Covid-19 virus.