This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.bbc.co.uk/news/business-52279871
The article has changed 13 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Coronavirus: UK economy 'could shrink by record 35%' by June | Coronavirus: UK economy 'could shrink by record 35%' by June |
| (32 minutes later) | |
| The UK's independent tax and spending watchdog has warned the coronavirus pandemic could see the economy shrink by a record 35% by June. | |
| The Office for Budget Responsibility (OBR) said that this was based on an assumption that the current lockdown would last for three months. | The Office for Budget Responsibility (OBR) said that this was based on an assumption that the current lockdown would last for three months. |
| Once restrictions are lifted, the OBR expects no lasting damage to growth. | |
| Separately, the International Monetary Fund warned the virus would push the UK into its deepest slump for a century. | Separately, the International Monetary Fund warned the virus would push the UK into its deepest slump for a century. |
| The IMF expects the UK economy will shrink by 6.5% in 2020, while the global economy will contract by 3%. | The IMF expects the UK economy will shrink by 6.5% in 2020, while the global economy will contract by 3%. |
| It said the pandemic had plunged the world into a "crisis like no other". | It said the pandemic had plunged the world into a "crisis like no other". |
| The OBR's estimates - which focus on the virus's impact on the UK economy and public finances - is more severe. | |
| It said a three-month lockdown followed by three months of partial restrictions would push up the UK's borrowing bill to an estimated £273bn this financial year, or 14% of gross domestic product (GDP). | It said a three-month lockdown followed by three months of partial restrictions would push up the UK's borrowing bill to an estimated £273bn this financial year, or 14% of gross domestic product (GDP). |
| This would represent the largest deficit as a share of GDP since World War Two. | This would represent the largest deficit as a share of GDP since World War Two. |
| While borrowing is expected to jump, the OBR said the government's unprecedented financial help for workers and businesses would help to limit any long-term damage. | While borrowing is expected to jump, the OBR said the government's unprecedented financial help for workers and businesses would help to limit any long-term damage. |
| It expects half of the sharp drop in economic growth in the second quarter to be reversed in the three months to September. | It expects half of the sharp drop in economic growth in the second quarter to be reversed in the three months to September. |
| While the UK economy is expected to contract by 12.8% for the year as a whole, the UK is expected to get back to its pre-crisis growth trend by the end of 2020. | |
| The OBR expects a more lasting impact on unemployment, which is estimated to rise by 2.1 million to 3.4 million by the end of June. | The OBR expects a more lasting impact on unemployment, which is estimated to rise by 2.1 million to 3.4 million by the end of June. |
| Under this scenario, unemployment would hit 10%, from its current 3.9% rate, before easing to around 7.3% at the end of the year. | Under this scenario, unemployment would hit 10%, from its current 3.9% rate, before easing to around 7.3% at the end of the year. |
| The jobless rate is expected to remain elevated until 2023, when it is expected to drop back to 4%, in line with the OBR's March forecast. | The jobless rate is expected to remain elevated until 2023, when it is expected to drop back to 4%, in line with the OBR's March forecast. |
| Lasting impact on public finances | Lasting impact on public finances |
| The OBR expects UK debt to remain elevated for years to come, with extra borrowing expected to push Britain's debt share to above 100% of GDP this financial year under the three month lockdown scenario. | |
| While this will drop sharply as the UK economy recovers, public debt is expected to remain at 84.9% of GDP in four years time, much higher than the 75.3% forecast in the March Budget. | While this will drop sharply as the UK economy recovers, public debt is expected to remain at 84.9% of GDP in four years time, much higher than the 75.3% forecast in the March Budget. |
| However, the OBR said extra spending by the Treasury to support the economy was crucial to limit the economic damage. | However, the OBR said extra spending by the Treasury to support the economy was crucial to limit the economic damage. |
| "The government's policy response will have substantial direct budgetary costs, but the measures should help limit the long-term damage to the economy and public finances - the costs of inaction would certainly have been higher." | "The government's policy response will have substantial direct budgetary costs, but the measures should help limit the long-term damage to the economy and public finances - the costs of inaction would certainly have been higher." |
| It added that while the lockdown was the main constraint on economic activity, relaxing these measures too soon would cause greater damage. | It added that while the lockdown was the main constraint on economic activity, relaxing these measures too soon would cause greater damage. |
| "The reason why most of the short-term economic impact comes from these measures is that they are successful in limiting the spread of the disease. | "The reason why most of the short-term economic impact comes from these measures is that they are successful in limiting the spread of the disease. |
| "If the measures were not stringent enough to control the disease, then the economic impact from illness would be that much greater." | "If the measures were not stringent enough to control the disease, then the economic impact from illness would be that much greater." |