UK economy faces deepest downturn

DelhiUpdated: May 07, 2020, 10:15 PM IST
main img
File Photo: UK Prime Minister Boris Johnson. Photograph:(AFP)

Story highlights

UK is the second most-affected country in the world due to the pandemic. 

With each passing day, the UK's misery is only increasing and the coronavirus is behind the economic seizure. It is the second most-affected country in the world due to the pandemic. 

The country is now facing the risk of an economic collapse not seen in 300 years. The Bank of England says the economy will fall by 14 per cent this year.

Among the dust-gathering files, the UK's central bank found a similar event that literally put the economy in a deep freeze. It was the great frost of 1709.
So this collapse is the worst in 300 years. Prime Minister Boris Johnson has a tough task. Over 200,000 coronavirus cases and 30,000 deaths have been reported so far. No wonder, the newly-elected leader of opposition Keir Starmer questioned the PM with utter perplexity.

On top of this, the UK government is planning to ease the lockdown restrictions next week. 

But, companies say reopening will be difficult. Ao, why is Boris Johnson rushing to open up the economy? 
The answer lies with this man chancellor of the exchequer Rishi Sunak who has spent over eight billion pounds to save 6.3 million jobs at some 800,000 firms.

And this is just one of the many schemes announced to cushion the economy. So, the government is running low on funds both to fight the pandemic, and to rescue the economy.

Unemployment will rise above 9 per cent by the end of this year. Inflation could drop to zero next year. As of now, it remains below 2 per cent due to the fall in consumer spending by 30 per cent in recent weeks.

Interest rates are at a record low of 0.1 per cent, but British firms are in no position to take more loans. Three sectors are the worst hit - aviation, steel and auto. Their combined output is set to fall by 55 per cent.

Johnson is due to announce the next steps in Britain’s battle to tackle the novel coronavirus on Sunday following a review by ministers of the current measures that have all but shut the economy and kept millions at home.