The Bank of England on Thursday forecast a record slump of 14 per cent in Britain’s annual economic output this year, warning that the impact of the novel coronavirus pandemic could last well into 2021.
The central bank said it expects Britain’s GDP to fall by nearly 30 per cent year-on-year in the first half of this year before bouncing back in the second half if social distancing measures are lifted.
GDP would not reach its pre-pandemic level until the second half of next year under the bank’s model, which forecasts growth of about 3 per cent in 2022.
Consumer spending is expected to follow a similar pattern while household income growth is likely to remain “volatile,” it said.
It forecast business investment to decline by about 26 per cent this year and unemployment to hit a peak of 9 per cent.
“We expect the recovery of the economy to happen over time, although much more rapidly than the pull-back from the global financial crisis,” the bank’s governor, Andrew Bailey said.
“Nonetheless, we expect that the effects on demand in the economy will go on for around a year after the lockdown starts to lift,” Bailey added.
Prime Minister Boris Johnson has spoken of plans to ease some lockdown rules next week but warned that lifting measures too early could deepen Britain’s economic crisis.
Britain has reported more than 30,000 deaths linked to COVID-19, Europe’s highest official death toll.
Experts’ analysis of seasonal excess deaths suggests some 50,000 people may have died.
