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NIESR Sees UK GDP Contraction Of 15-25% In Q2 On Covid-19

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NIESR Sees UK GDP Contraction Of 15-25% In Q2 On Covid-19

The UK economy would be plunged into a severe recession in the second quarter if the lockdown imposed to slow the spread of the coronavirus, or Covid-19, pandemic continues, the National Institute of Economic and Social Research said on Thursday.

The think tank predicted 5 percent decline in economic output in the first three months. And “if a lockdown continues” the GDP could plummet by around 15-25 percent in the second quarter, the NIESR said.

“The lockdown is causing the largest contraction in economic activity since 1921,” the NIESR said.

“Lockdowns reduce overall activity by around 20% in every month of their operation with larger effects possible in other sectors, particularly if the lockdowns are prolonged.”

GDP declines in two consecutive quarters mean the economy is in a technical recession. In the fourth quarter of 2019, the UK economy stagnated.

Official data from the ONS released earlier on Thursday showed that the UK economy expanded just 0.1 percent in the three months to February. The weakness in February was largely driven by a steep fall in the construction sector.

“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,” NIESR Senior Economist Kemar Whyte said.

“Nonetheless, instant and significant recovery remain a distinct possibility if the spread of the virus comes to halt quickly.”

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