- If a second outbreak occurs, the British economy could fall by 14%.
- British Finance Minister Rishi Sunak said that the UK is not the only country to suffer from this situation.
- Income growth of five years or more could be lost in many countries as a result of the COVID-19 pandemic.
The United Kingdom is most likely to be hardest hit by the COVID-19 recession among major economies, a leading economic organization warns. The British economy is likely to fall by 11.5% by 2020, plummeting further than other developed economies, such as Germany, France, Spain, and Italy.
If a second outbreak occurs, the British economy could fall by 14%. The Organization for Economic Co-operation and Development (OECD) describes the epidemic’s impact on the economy as “catastrophic” everywhere.
In its latest assessment, the OECD found that the trade, tourism, and hospitality industries, which account for the bulk of the UK’s service economy, were hit by restrictions imposed by the government.
The COVID-19 Crisis
In response to the OECD report, Finance Minister Rishi Sunak said that the UK is not the only country to suffer from this situation:
“In common with many other economies around the world, we’re seeing the significant impact of coronavirus on our country and our economy. I’ve been clear that our top priority has always been to support people, jobs, and businesses through this crisis, and this is what we’ve done. The unprecedented action we’ve taken to provide lifelines that help people and businesses through the economic disruption will ensure our economic recovery is as strong and as swift as possible.”
The Paris-based organization says income growth of five years or more could be lost in many countries as a result of the COVID-19 pandemic. The OECD considered two scenarios of pandemic consequences.
In more serious cases, the global economy could grow by 7.6% this year. Although the report says that the pandemic has begun to decline in many countries, and that economic activity has begun to restart, people do not expect a convincing recovery.
The report found that public health prospects are extremely volatile, and that is reflected in the decision to assess the two scenarios. In a more moderate scenario, the virus continues to fade. In a worse scenario, there is a second wave of illness outbreaks by the end of 2020.
The report describes both prospects as dangerous. Both scenarios show that economic activity cannot return to normal during the OECD review period. The current deep recession will be followed by a slow recovery.
In the more gloomy scenario of the two possibilities, this year’s economic crisis could be very serious. In that scenario, France and Spain will be in more crisis than the UK this year. OCED’s global production forecast for 7.6% decline is significantly worse than other agencies’ predictions – such as the International Monetary Fund and the World Bank – have warned about the level of instability.
As of the end of 2021, the report says that many countries could lose income gains of five or more years and the impact on livelihoods will be particularly severe among the most vulnerable groups. The OECD also said that the pandemic was speeding up the change from what it called “excellent integration” to “large dispersion.”
It is essentially an obstacle to globalization, reflected in trade and investment restrictions and many borders are closed at least while the health crisis is still ongoing.