UK economy could contract by up to 25% in Q2, says NIESR
By Michele Maatouk
Date: Thursday 09 Apr 2020
(Sharecast News) - The UK economy could contract by between 15% and 25% in the second quarter if the lockdown continues, the National Institute of Economic and Social Research (NIESR) said on Thursday.
It said the current "once in a century event poses major threat to UK growth" and that the economy could contract by 5% in the first quarter of 2020.
It noted figures out earlier from the Office for National Statistics, which showed the UK economy expanded 0.1% in the three months to February, only marginally weaker than NIESR had forecast last month. Output declined in February itself, mainly due to a large fall in the construction sector.
"The lockdown is causing the largest contraction in economic activity since 1921," NIESR said, adding that lockdowns reduce overall activity by around 20% each month they are in place.
"The UK economy is now almost certain to experience a major contraction in the second quarter of the year," said senior economist Kemar Whyte. "The forceful impact of Covid-19 and the global lockdown has thrust the economy into unknown territory where we could see GDP declining at a record quarterly rate. Nonetheless, instant and significant recovery remain a distinct possibility if the spread of the virus comes to halt quickly."
The UK has been in lockdown since 23 March, with the government expected to extend the measures beyond next week after the Easter weekend.
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