Think tank The Resolution Foundation warned it could take five years for the UK economy to recover from the economic crisis caused by the coronavirus pandemic. Experts said if the UK lockdown continues for six to 12 months it could permanently wipe between five and seven per cent off the UK’s gross domestic product (GDP).
The UK economy is shrinking at a record pace as businesses across the services sector shut up shop as millions of Britons feel the economic bite of the coronavirus pandemic, which is spreading panic across the globe.
The report said: “The longer the lockdown lasts, the more people are likely to find themselves without a job to return to when it ends.”
Richard Hughes, research associate at the Resolution Foundation, warned the UK could be plunged in to a recession worse than any experienced in the 1980s and 1990s.
At the worst point of the 2008-09 recession, Britain’s economy shrank 2.1 percent in a single quarter.
He said: “The Government has made two bold but necessary decisions to combat coronavirus by closing down sections of the economy and socialising the cost of doing so.
“But it will need to make many more big policy changes to ensure the current strategy is sustainable amid huge uncertainty about the scale and duration of the corona crisis.
“The Government must prepare for a scenario in which the numbers of people out of work could far exceed the levels experienced during the 1980s and 90s recessions.”
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Experts also warned the unemployment rate could more than double to 10 percent.
Chancellor Rishi Sunak reacted to the OBR figures, saying they were “not surprising” as the country is dealing with a crisis “unlike anything we’ve seen before”.
He said: “I genuinely don’t believe this is a time for ideology or orthodoxy – this is an unprecedented time and unprecedented crisis and that calls for an unprecedented economic response.
“So in that sense it’s not surprising to see some of these figures because what we’re dealing with here is unlike anything we’ve seen before which is why we’ve put in place the measures we have.”
He said he was “deeply troubled” by the prospect that two million people would lose their jobs due to the impact of the virus.
The chancellor said: “This is going to be hard. Our economy is going to take a significant hit.”