Economic experts have warned that the global coronavirus pandemic and lockdown measures in place across the world may cause the UK economy to shrink by 35%. The BBC has reported that independent tax and spending watchdog, The Office for Budget Responsibility, has raised the alarm over the potential spill-out from the coronavirus pandemic. While making the stark warning, the independent watchdog added that the 35% reduction projection also included a massive growth of unemployment from 3.9% to 10%. However, despite its findings making for ominous reading, the research was premised on two hitherto unknown constants. Firstly, the model used by The Office for Budget Responsibility was based on a projection of a three-month lockdown. Secondly, the organisation added to its findings that despite the obvious potential for the UK economy to shrink, it expected business to hastily return to normal, in the immediate aftermath of a lockdown.
Broader Impact of Coronavirus on the UK Economy
With a vast proportion of the country’s employees placed on the government’s Coronavirus Job Retention Scheme, many employees have simply been furloughed. However, increasing numbers have fallen foul of the job market, with record numbers of Universal Credit application being submitted. In the last two weeks of March, 500,000 people started the process of claiming Universal Credit. Figures from the first week of April denote a significant drop. Yet, statistics on web searches for terms related to unemployment and unemployment benefits remain high. Jobs website Indeed.co.uk has reported that vacancies for jobs in food preparation, food service, hospitality, tourism and beauty sectors have fallen by as much as 70%. Across all industries, there has been a staff lay-off rate of around 30%.
After a leaked memo hinted at a Cabinet split over the precise date of lifting a lockdown, with some ministers vying for a May 4 reopening and others considering May 25, pressure has increased on the government to formulate a viable timetable towards reopening the country.