The UK economy is constantly shrinking ever since the country was forced into lockdown. Reportedly, due to long running Brexit endeavors the kingdom experienced zero growth in the final quarter of 2019 and now due to the pandemic, the GDP further fell 2% in the next three months. Analysts are expecting that this rate will change into double digits in coming months.
The uncertainty revolving around Brexit had caused millions of consumers and businesses to lose faith and confidence in the system. A recession was probable when the UK gained high debt levels, and high unemployment rate due to Brexit plans in the last 4 years.
Sharpest Recession In The History of UK Economy
The economy is expected to be contracted by 14% this year according to the Bank of England (BoE). This is the sharpest contraction since the 18th century but it does not mean that BoE is providing an exact number. They maintain that the economy will continue to contract at a faster pace in the coming months.
The UK economy was already suffering a wide account deficit and a high debt and employment level due to the brexit transition period. Then the pandemic started making its impact right in the first week of lockdown.
Ease In the Lockdown
Bank of England announced the upcoming recession right after the government eased the lockdown. Some of the people who were working from home are encouraged to return to their workplaces. Manufacturing, food, and construction industries are allowed to reopen along with many other businesses such as estate agents, movers, transporters etc. as long as everyone follows the pandemic prevention measures.
It is Expected To Rebound More Quickly Than Before
According to reports, lockdown in the UK is expected to end completely by the month of September. During this time, the UK economy will enjoy the sharpest recession since 2008. The Government has taken a bold step in partially lifting the lockdown to support employment and income levels.
BoE expects this downturn to be short-lived as it thinks the country can bounce back by 15% next year, after Brexit. After the global financial crises, it took five years for the UK to restore the size of its economy. BoE expects that it will take at most 2 years to return to its pre-crisis size. Further, a danger of coronavirus is there until there is a vaccine.