Amid coronavirus-enforced lockdown, UK to face sharpest economic downturn in centuries

Britain is currently standing on the threshold of its deepest recession in 300 years. The country has been warned of pay cuts and up to 2 million job losses caused by the coronavirus-enforced lockdown.

The death toll in UK has hit 12,107. Adding to this woes, government figures have predicted the country’s economy may be slashed by a record 35 per cent by June. Unemployment could rocket to 3.4 million and the deficit may spiral to £218 billion this year.

The figures, produced by the Office for Budget Responsibility, predict the worst GDP slump in a single quarter since records began in 1908.

A three-month lockdown would increase borrowing by £218 billion to £273 billion this financial year, amounting to 14 per cent of GDP.

The OBR also predicted that it would take another three years for the unemployment rate to fall below four percent.

The Chancellor, however, despite the pressure to get the economy back on track insisted it was vital to maintain the curfew. UK Chancellor Rishi Sunak has pledged billions of pounds in wage subsidies and loan guarantees to help workers and businesses through the shutdown.

This comes as the International Monetary Fund (IMF) said it expected the global economy to shrink by three per cent this year. It warned the global economy would suffer its deepest plunge since the Great Depression of the 1930s.

It will also be the first time since the Depression that both advanced, emerging market and developing economies would all be in recession.

The IMF also predicted the UK economy would shrink by 6.5 per cent in 2020, compared with its January forecast for 1.4 per cent GDP growth. A decline of this magnitude would be bigger than the 4.2 per cent drop in output seen in the wake of the financial crisis.

(with inputs)