THE GUARDIAN: Worst is yet to come for UK economy
To grasp how low are the expectations for the UK economy, consider this: on Wednesday it was announced that the national output had just had its biggest drop since the great crash of 2008 — and the immediate response of many analysts was surprise that it had not fallen further.
Even so, the statistics make grim reading. Over the first three months of 2020, GDP shrank 2% on the previous quarter. The economy was already slowing in February, and then came the UK’s first coronavirus deaths. In March alone, GDP plunged nearly 6% — the greatest contraction since records began in 1997.
Amazingly, most of that would have happened over just the last week of the month, the first full week of the government’s lockdown. The effect was drastic: travel-agent demand collapsed, car plants shut and exports fell off a cliff.
Yet however grim those numbers look, they are just the beginning. The near unanimous view among economists is that the UK is diving into what the chancellor, Rishi Sunak, warns is a “significant recession”. However bad that sounds, it is probably a gross understatement: the Bank of England is forecasting the worst recession in more than 300 years.
The reason is simple: to try to quell the pandemic, this government has deliberately shut down huge swathes of the economy. While England has begun the slow and risky process of lifting that lockdown, the other nations are still directing people to “stay at home”. On easily the most important issue of our time, Boris Johnson is in effect the prime minister of England, not the UK.
Even before the government ordered the lockdown, restaurants and pubs were going empty and parents were pulling children out of school. On this issue, the public was way ahead of Westminster and polls show they remain far more focused on tackling the pandemic then restarting commercial life.
Indeed, the two are directly linked: lift the lockdown too far, too soon and the obvious risk is of a second wave of infections that would destabilise the public and derail the economy. The best way of striking a balance between commerce and safety is to commit seriously to a mass test-and-trace regime, as countries from Germany to South Korea are doing. Sadly, Westminster’s efforts in that direction have fallen far short. /London, May 13