British economy facing worst crash in 300 years
Bank of England projects deepest recession since 1706
LONDON: Battered on several fronts, especially the impact of the lockdown due to the coronavirus pandemic, the British economy is likely to shrink 14% this year, registering the deepest recession since 1706, the Bank of England said on Thursday.
The forecast came as Prime Minister Boris Johnson said the government will proceed with “maximum caution” on easing coronavirus restrictions.
Presenting century-wise data on the size of the British economy since 1700, the UK’s central bank, however, said growth could bounce back to 15% in 2021, with the GDP recovering to its pre-coronavirus peak by the second half of next year.
Andrew Bailey, the bank’s governor, said he expected any damage from the pandemic to be relatively small, since the economy was likely to recover “much more rapidly than the pullback from the global financial crisis” of 2008.
“The scale of the shock and the measures necessary to protect public health mean a significant loss of economic output has been inevitable in the near term,” Bailey said.
Referring to wage subsidy schemes announced by chancellor Rishi Sunak for the employed and the self-employed, Bailey said the success of these schemes and the bank’s own stimulus meant there would be “limited scarring to the economy”.
Johnson is due to address the nation on Sunday on easing some restrictions from Monday, with ministers keen to reopen the economy. The main message to “stay at home” is likely to be withdrawn, with controlled allowances for travel and gatherings.
Scotland and Wales have separately announced their easing the measures. The two UK constituents and Northern Ireland have the power to diverge from measures announced by London, but there are efforts to make sure the easing is applied uniformly across the UK.
Officials have suggested a gradual move towards reopening businesses across the UK, while ministers argue that firms operating outdoors might be able to find a way to function in the summer months.
The Bank of England estimated that an extra two weeks of lockdown would cost about 1.25% of GDP in the short term and raise unemployment by 0.75%.
Meanwhile, a new official analysis by the UK’s Office for National Statistics (ONS) said the risk of death from the coronavirus among Indian and other nonwhite groups in the UK is “significantly higher” than those of white ethnicity.
The analysis said Indian and other non-white males are 4.2 times more likely to die a Covid19-related death and non-white females are 4.3 times more likely than white males and females.
In another development, health officials said 400,000 surgical gowns imported from Turkey did not meet UK standards and were unusable, adding to concerns over shortage of personal protective equipment.