As a result of the effects of the Corornavirus on businesses and established measures to contain it’s spread, the United Kingdom have suffered an economic shrink by 5.8% in March.
According to the United Kingdom’s Office for National Statistics, so far from 1997 till date, this economic shrink is recorded the most severe.Gross Domestic Product (GDP) experienced a decline by 2% in the first quarter of the year unlike the last quarter of 2019, making this season the most intense drop since the economic meltdown in the world began.
Jonathan Athow, an economic statistician at the Office for National Statistics said “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.
“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially,” the statistician added.
As shops, pubs, restaurants, theaters, cinemas and gyms closed down in the last week of March when the government of the United Kingdom stiffened lockdown regulations in a bid to mitigate the spread of the virus, economic fall had a spread up in April and May.
“March’s GDP figures showed that the UK economy was already in freefall within two weeks of the lockdown going into effect. And with the restrictions in place until mid-May and then only lifted very slightly, April will be far worse,” said Ruth Gregory, senior UK economist at Capital Economics.
Some industries were exempted from the lockdown as Information Technology Supports and the manufacture of pharmaceuticals, soaps and cleaning products had an opposite story and rather experienced growth in the first three months of the year.
The set lockdown easing regulations in England is informed by the sad financial data recorded in March. UK’s Prime Minister, Boris Johnson is urging employees in some industries like the construction and manufacturing industry to resume operation beginning on Wednesday. Hotels and nonessential businesses are however to remain out of operation.
A note of warning last week from the Bank of England revealed that the British economy could dwindle by 14% this year. Based on the bank’s data history, the effect of the COVID-19 on the economy would be the heftiest yearly squeeze since 1706’s 15% plunge.
According to a report that analyzed the impact of the Coronavirus pandemic, the central bank explained that Gross Domestic Product (GDP) could recede with as much as 25% in the second quarter of the year, reducing the economy by 30% of the final quarter of 2019. Also, the rate of unemployment is expected to rise by 9%.
The Bank of England in anticipation of a speedy economic comeback in 2021, advised that the reality of it’s anticipation is highly dependent on “evolution of the pandemic, and how governments, households and businesses respond.”
In a bid to salvage the economic crisis, the central bank is cutting down interest rates to a record low in March and dispatching a £200 billion ($248 billion) bond buying program.
A recovery scheme that covers tax relief for businesses summing up to £30 billion ($37 billion) and interest-free loans for up to 12 has been introduced by the government of the United Kingdom.
In addition, the UK government is also paying 7.5 million workers under a job retention program salaries. This exercise has recently been prolonged by four months through the end of October. Economists are of the opinion that furlough scheme could cost the UK Treasury up to £100 billion ($123 billion).