ECONOMIC HIT
Coronavirus could leave 2 MILLION unemployed as GDP falls by 35% but economy WILL bounce back afterwards, experts say
A THREE-month lockdown could leave two million Brits unemployed and a 35 per cent fall to GDP, experts have predicted today.
But as soon as the restrictions are lifted the economy is likely to bounce back, the Office for Budget Responsibility said.
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Independent financial analysts predicted that Britain would face a huge hit as a result of the ongoing coronavirus crisis.
They modeled a prediction of a three-month lockdown, and some restrictions in place for another three months after that.
Britain's lockdown has been in place for just three weeks so far.
However, the experts themselves admitted that their models were very uncertain and could change quickly.
They said that without the Government's intervention to save jobs, the situation would look even worse.
Britain's budget deficit could hit £273 billion in the 2020/21 financial year, five times the OBR's previous estimate. That could reach 100 per cent of the nation's GDP.
The second quarter of the year could see a 35 per cent hit to the nation's GDP.
The unemployment rate could double to around 10 per cent, too, the experts said.
Chancellor Rishi Sunak has said repeatedly that the economy will take a significant hit thanks to the ongoing virus crisis.
Hundreds of thousands of people have enquired about emergency business loans, and around half of businesses are expected to take advantage of the Government's scheme to pay 80 per cent of people's wages.
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Mr Sunak said this afternoon: "It is clear this will have a very significant impact on this economy and economies around the world.
"It's important we're honest about that - people should know there will be hardship, we wont be able to protect every job or every business.
"The report makes clear the actions we've taken unprecedented actions will help to mitigate the impact of the virus on the economy and if we hadn't done those things the impact would have been much worse."
He stressed that banks were working over the weekend trying to process a backlog of applications and enquiries.
Just 4,000 businesses have received emergency coronavirus loans so far, but the Chancellor said: "I think you will see the numbers tick up considerably into the thousands" soon.
He insisted that the acceptance rates of banks were "reasonably high" and banks were extending overdrafts too.
"We are watchful of every single day and working with the banks to make sure that happens," he added.
Torsten Bell, Chief Executive of the Resolution Foundation, said today: "The UK is experiencing a deeper recession than we have seen for three centuries and is on course for the highest borrowing since the war.
"While driven by the government’s twin decisions to close down large swathes of our economy and to offer unprecedented support to firms and families, its actual cause is the coronavirus outbreak itself.
"This should caution against those arguing that policy makers can avoid these costs by simply ending the current lockdown.”
"Policy makers should also recognise that these forecasts represent just one scenario for a three month lockdown.
"History shows that measures to control a pandemic can in fact last much longer."
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