OBR warns that the UK economy may contract by more than a third before bouncing back by end of 2020
The Office for Budget Responsibility (OBR) has released a new report which suggests that the UK economy may shrink by 35 per cent in June as a result of the Government’s ‘Stay at Home’ guidance, before ‘bouncing back’ in the following months.
The OBR report, which is not considered an exact prediction, suggest that UK gross domestic product (GDP) could drop by more than a third in the second quarter of the year and by 13 per cent for 2020 as a whole.
As a result, it has warned that unemployment may rise by 10 per cent and that people could see a hit to living standards below that of the 2008 financial crisis, but it said that the country’s recovery would be quick, thanks in part to the Governments measures and stimulus package.
The OBR’s report is based on the assumption that the UK lockdown will last for at least three months. It said: “The longer the period of economic disruption lasts, the more likely it is that the economy’s future potential output will be scarred.”
The OBR concluded by saying that GDP could recover to its pre-virus levels as quickly as the end of this year if the right steps were taken and businesses could get back to work.