UK’S economy ‘won’t recover until late 2024’

BRITAIN’S economy will shrink by 11 per cent this year due to the coronavirus, according to downgraded forecasts being issued by the EY ITEM Club think-tank tomorrow.

The ITEM Club, which uses the Treasury’s models to make its growth assessments, will cut its outlook for UK gross domestic product (GDP) for a third time due to the disruption caused by the outbreak.

It will say that GDP will not return to pre-pandemic levels until late 2024, 18 months later than it previously thought.the downbeat assessment of the UK’S prospects comes as global trade credit insurer Euler Hermes warns 31,000 Uk-based businesses could fail next year due to the coronavirus recession and disruption caused by a nodeal Brexit, an event it believes is becoming increasingly likely.

The ITEM Club is expected to pour cold water on hopes of a rapid or “V-shaped” recovery, due to the collapse in economic

SMALL business’ cash flow problems have been exacerbated by the coronavirus, with the average amount they are owed in late payments up by 25 per cent, according to Intuit Quickbooks.

The accounting software group said that small to medium-sized enterprises (SMES) were chasing £50billion in late payments before the outbreak.the virus has now thrown the economy into reverse.

Intuit UK country manager Chris Evans said that data from its small business clients indicates they have seen a 20-25 per cent increase in overdue payments and added the pandemic had magnified SMES’ existing problems of cash flow and late payments. activity caused by the pandemic. Even though the lockdown restrictions have been eased, enabling many parts of the economy to restart, May saw poor growth and, as a result, the recovery will take longer than initially expected.

It predicts the unemployment rate, currently at 3.9 per cent, will more than double.

At the start of the year, the ITEM Club thought the UK would grow by 1.2 per cent. It cut its 2020 forecast to -6.8 per cent in April and -8 in June.

Euler Hermes predicts that business failures will rise eight per cent this year to 23,700 cases and then 33 per cent in 2021 to 31,500.

Maxime Lemerle, director of sector research, said: “As economies emerge from lockdowns a wave of insolvencies will follow, between the end of 2020 and the first half of 2021, due to uneven trading conditions, differing reopening strategies and emergency policy measures.”