The UK’s economy has been severely affected by the pandemic, as has the world’s. Lockdown measures implemented by Prime Minister Boris Johnson on March 23 have led to unavoidable job losses and a contraction in the UK’s GDP.
A Reuters poll for June 19-24 has found that the UK’s economy will likely begin it’s recover next quarter as more businesses reopen.
As economic activity crashed to a strip after the lockdown was called, June’s Reuters poll predicted that the economy would contract 17.3 percent in Q2.
According to median forecasts, the worst case scenario for the UK’s economy would see it shrink a shocking 19 percent this quarter.
But the upside is that as lockdown restrictions begin the gradually ease, it is predicted that next quarter (Q3) will see 10.5 percent growth.
James Smith at ING held that the worst may be over for Britain’s economy.
He said: “April was undoubtedly the low point in activity.
“We’ll probably see a more pronounced rebound during the third quarter as a broader range of businesses are expected to reopen.
“But even then, the economy will remain well below its pre-virus size, and we don’t think it will be until late 2022 or 2023 until it has returned to those levels.”
Matching the hopes of experts for a V-shaped recovery, the economy is expected to contract 8.7 percent this year, and then grow 5.5 percent next year.
The Reuters poll is comprised of nearly 80 economists, with the percentages being the median answer from those surveyed.
In an effort to support the economy in unprecedented hardship, the Bank of England has cut its key interstate to an all-time low of 0.1 percent.
It has also restarted asset purchases, also knows as quantitative easing, and has bolstered it’s value by £100 billion as a result.
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It comes as the fast approaching Brexit transition period comes closer to it’s end-of-year deadline, of which Boris Johnson has repeatedly stated he will not be extending.
Reuter’s held an additional poll, of which 34 of those prior responded, on whether the transition period should be extended: Just over three quarters, 26 of 34, responded that it should.
Peter Dixon at Commerzbank said: “Ruling out an extension to the transition period is a foolish move by a government that does not appear to be acting in the economy’s interests.”
But Reuters pollsters have also maintained that Britain and the EU will agree on a deal, which they have maintained since June 2016, in what would surely boost Britain and the EU’s economy.
The government has taken unprecedented actions against the pandemic’s negative affects on the economy.
Chancellor Rishi Sunak announced on March 26 the furlough scheme, which entitled workers unable to work during the pandemic to 80 percent of their wages.
But despite this, the UK has seen a horrible toll economically from the virus, with the unemployment rate sitting at 3.9 percent according to the Office of National Statistics.
A report by the Organisation for Economic Cooperation and Development published at the start of June said that UK is likely to suffer the worst worldwide in regards to economic damage, with their document predicting a 11.5 percent GDP slump.
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