Recession ‘to be worst in modern history’

BRITAIN is heading for ‘a recession of the scale we have not seen in modern history’ as coronavirus hammers business, say experts.

In a bleak report on the UK economy, research group IHS Markit said demand ‘collapsed’ even before Boris Johnson ordered the shutdown of pubs, restaurants, shops and other businesses.

The group also reported an unprecedented slump in output in the US and Europe.

Chris Williamson, chief business economist at IHS Markit, said: ‘March saw business activity collapse across all major developed world economies.

‘The global economy is already in a recession that will inevitably deepen in the coming months, possibly to an extent that we have not seen in recent history.’

Markit said its latest index of activity in the UK indicated that the economy was shrinking at a quarterly rate of between 1.5pc and 2pc this month prior to many shop, office and factory closures.

At the nadir of the financial crisis, the UK economy shrank by 2.1pc in a single quarter.

But warning that things will be far worse this time, Williamson said the slump so far this month ‘will likely be dwarfed by what we will see in the second quarter as further virus containment measures take their toll and the downturn escalates’.

Markit said its index of activity in the UK services sector – where scores below 50 show decline – fell to a record low of 35.7 this month.

The manufacturing reading slid to a three-month low of 48, a dramatic reversal from February’s 51.7, which was the first month of growth in ten months.

Together, the composite index sank to 37.1 from 53 in February – the lowest reading since the PMI surveys began in 1998.