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UK’s economy to lose £800 bn in the next 10 years due to the pandemic

UK economy
NIESR expects the economy to bounce back next year

Due to the prolonged lockdown caused by the coronavirus pandemic, the UK’s economy could lose around £800 billion in income in the next years, according to the National Institute of Economic and Social Research (NIESR).

The institute also expects the economy to bounce back next year, but not to its previous level. It says the unemployment rate will be around 5 percent after hitting 10.5 percent this year.

It also revealed that the efforts of the government to limit the economic impact of Covid-19 with loans, grants, and guarantees to thousands of businesses would send public sector debt to 95 percent of GDP next year, 12 percentage points above its current level.

NIESR deputy director, Garry Young told the media, “There is massive uncertainty about how long and how severe this crisis will be. For our reassuring main-case forecast scenario to come true it is necessary to believe that the complex network of relationships that make up the economy can be restored after the lockdown without any significant long-term damage.”

“So far the signs are promising, but the most significant challenges are likely to come as we approach the end or winding down of the lockdown and the supportive schemes are withdrawn. In those circumstances, the government schemes will need to be adapted to help businesses survive in a partially recovered economy.”

Experts believe the coronavirus pandemic could also lead to delay in the post-Brexit talk between the UK and the European Union. The UK, which left the European Union, on January 31st, is in a transition period till the end of this year. However, two negotiators who were leading the post-Brexit trade talks have self-quarantined themselves.

So far, the UK has reported around 21500 deaths due to the coronavirus.

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