GDP to plunge as UK heads for recession, warns CEBR
By Abigail Townsend
Date: Monday 30 Mar 2020
(Sharecast News) - The UK economy is on course to enter the deepest recession since the financial crisis, a respected think tank warned on Monday, with growth set to slump by a record 15% in the second quarter.
Updating its forecasts for the British economy, the Centre for Economics and Business Research said it expected the economy to contract only marginally in the first quarter, by 0.5%.
But that is forecast to be followed by the steepest quarter-on-quarter decline since comparable records began in 1997, of 15%. The previous largest quarterly fall, of 2.2%, was recorded at the end of 2008.
Household consumption is also expected to fall, by around 15% during the second quarter, while business investment is predicted to decline by 13% in 2020. House prices are forecast to show a drop of 13% in the year the first quarter of 2021, while government borrowing is likely to reach ?180bn, or 7% of GDP, in the 2020-21 financial year.
The unemployment rate - currently 3.8% - is predicted reach 7% in the third quarter, "despite government measures to slow the rise", the CEBR said.
Looking beyond the second quarter, however, the CEBR said: "Our central assumption is that restrictions on businesses and the wider population will be loosened by the third quarter, as testing becomes more widely available, helping to identify and isolate infection hotspots more efficiently.
"We also expect the government to introduce measures to kick-start consumer spending as the economy returns to work, possibly a temporary VAT cut. We are also expecting measures to encourage business investment, which will otherwise will take until after 2030 to get back to its previous peak.
"This will lead to a sharp bounce back in the third and fourth quarter of the year. Over 2020 as a whole, we expect GDP to be 4% lower than 2019."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN