It could take four years for the British economy to recover from the coronavirus blockade, according to a study by economists at EY Item Club.
According to analysts’ forecasts, unemployment will rise from 3.9 to 9 percent this year. The EY Item Club also estimates that UK GDP will contract by 11.5%, which is a more dovish variable than the 8% forecast a month ago.
Why bad forecast for the British economy? Experts indicate consumer spending is much lower than expected. Moreover, there is low commercial investment which will impede the economic growth in the UK.
As a result – according to the EY Item Club – the post-Coronavirus economic recovery will take 18 months longer than previously anticipated, so it will continue until 2024.
Analysts note in the report, “We believe that declining consumer confidence – along with the impact of high unemployment and low investment – is one of the three main factors that may affect the British economy for the remainder of the year.”
“The country may have already passed the tipping point, but it will likely take longer than expected to return to its pre-crisis size,” they add.
The Boris Johnson government has already taken a number of steps to revive the economy and encourage consumers to spend. Earlier this month, Finance Minister Rishi Sunak cut value-added tax for the hospitality sector and promised to pay companies a bonus of £ 1,000 for each worker supported by a government subsidy, who will remain employed until January 31, 2021.
Last month, the Bank of England said it would pump an additional 100 billion pounds into the British economy to help it fight an “unprecedented” slowdown caused by the Coronavirus.
BBC / Agata C.
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