The UK economy will not return to 2019 levels for three years and taxpayers will foot the bill for government COVID-19 bailouts for decades, according to forecasting group EY ITEM Club, which cautioned that the recovery from the draconian curbs on activity might be slower than hoped, with the economy not expected to return to its late 2019 level until 2023.
It warned that the UK will face a 'deep, short recession' this year, with gross domestic product (GDP) falling by 6.8 per cent before only partially rebounding next year. The company had projected a growth of 1.2 per cent in its Winter Forecast 2020 released at the end of January.The UK economy will not return to 2019 levels for three years and taxpayers will foot the bill for government COVID-19 bailouts for decades, according to forecasting group EY ITEM Club, which cautioned that the recovery from the draconian curbs on activity might be slower than hoped, with the economy not expected to return to its late 2019 level until 2023.#
In late January, coronavirus was not even mentioned as a factor seriously threatening the global economy, and it was not included in the list of downside risks to the UK economy.
Even more striking is the forecast reduction of 13 per cent in GDP in the second quarter, the company said on its website.
Not only is the current state of the economy difficult to discern but the path forward is even harder to forecast. As the EY ITEM Club identifies, 44 per cent of consumer spending—the major engine of UK growth over the last couple of decades—is at risk of either being delayed or lost completely.
Until the company has clarity on the pace and level of the removal of the lockdown restrictions, forecasting the scale of the shock and the pace of recovery will remain very difficult, it said.
Fibre2Fashion News Desk (DS)
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