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Friday, May 29, 2020

Coronavirus plans to cut UK economic output by 15% Business

The coronavirus pandemic could plunge UK economic production by an unprecedented 15% in the second quarter of the year and unemployment to more than double, according to dire predictions.

The deepest recession from the financial crisis is now almost inevitable, according to analysts from the Center for Economics and Business Research (CEBR), after companies have closed the shop and consumer spending has fallen dramatically due to blocking restrictions.

The center said it expected the economy to shrink marginally by 0.5% in the first three months of the year, followed by the steeper economic contraction since comparable records started more than 20 years ago.

The expected slump would reduce the 2.2% contraction in the fourth quarter of 2008 when the bank slump will take hold, marking by far the worst three-month period since at least 1997.

The Japanese bank Nomura experienced a slightly less precipitous drop for the United Kingdom of 13.5%, but also forecast a significant rise in unemployment.

Bank analysts predict that government initiatives designed to convince employers not to let go of staff will not be enough to stop the figure more than doubling from 3.9% to 8% between April and June, before rising up to 8.5% in the third quarter.

The Department of Labor and Pensions said Wednesday that 477,000 people applied for universal credit in just nine days, forcing it to reallocate thousands of civil servants to help process applications.


CEBR and Nomura predict unprecedented economic pain in the second quarter, but both expect a subsequent rebound, assuming that restrictions on coronavirus are eased and the government adopts economic stimulus measures.

The CEBR said that a cut in VAT could help boost consumer spending and expects measures to promote investment in businesses, which otherwise would not recover until 2030.

This would have produced a “strong rebound” in the second half of the year, he said, although 2020 GDP would still be 4% lower than in 2019.

House prices will drop 13% in the year until the end of March 2021, CEBR said.

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