The OECD has said that the UK’s economic recovery remains uncertain as most countries are vulnerable to a second wave of coronavirus infections
According to a new prediction, the UK is set to experience the worst economic contraction among developed countries due to the COVID-19 pandemic.
The Organisation for Economic Co-operation and Development (OECD) estimates that the British economy will shrink by 11.5% in 2020 due to the nationwide lockdown that has been in place since the first wave of coronavirus hit the UK.
The OECD has said the global pandemic is “without precedent in living memory” and caused the “most severe economic recession” in nearly a hundred years.
Rishi Sunak, the Chancellor of the Exchequer, has said that the British economy has been experiencing similar difficulties to other countries across the globe. He went on to say:
“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 report also said that global economic activity would drop by 6% this year while unemployment would rise by 9.6% compared to the 5.4% rise last year. It also went on to say that economic recovery globally remains largely uncertain as the majority of countries are vulnerable to a second wave of COVID-19 infections.
If a second wave of infections were to occur in the UK, the nation could face an even deeper economic contraction of 14%. Although this scenario would see France, Spain and Italy’s GDP fall marginally lower.
The “double-hit scenario” would see unemployment rates in the UK rise to 10% and maintain that unsettling level throughout the next year despite the implementation of the government’s furlough scheme.
Rishi Sunak is urging the British public to return to the high street shops when non-essential businesses begin to reopen over the next few weeks. He went on to say that the longer the UK economy is shut down for, the worse the implications for the nation.
The Chancellor of the Exchequer has said that the government was meeting its self-imposed five tests to reopen the economy, despite concerns from government scientists about the resurgence of the disease.
Latest data from the Treasury department showed 8.9 million workers had been furloughed until the week of the 7th of June, which has directly cost the taxpayer £19.6bn.
This comes after the government received 800 reports of potential cases of fraud in relation to their furlough scheme that pays employees 80% of their wages.
The OECD had also recommended that the UK government delay the end of the originally planned transitionary period with the European Union.
It added: “Given the economic disruption caused by COVID-19, a temporary extension of existing trading relationships with the EU beyond the end of 2020 would help reduce uncertainty.”
