Hit to economy may be short

Hit to economy may be short and sharpA report from Oxford Economics suggests a strong recovery following the coronavirus pandemic is likely, with the economic impact of the crisis potentially set to be sharp but short. The report, commissioned by ICAEW, says that as GDP has declined due to a planned, partial shutdown of the economy, activity and demand should in theory rebound as the economy reopens, with fiscal and monetary support rolled out by the Government and the Bank of England amid the pandemic helping drive an upturn. The study forecasts that further easing of lockdown measures in the coming months could deliver economic growth in the second half of the year. The report says GDP could dip 14% in Q2, while unemployment is likely to climb 3% from 4% at the start of 2020 to 7% by year end, with the Government’s furlough scheme helping ensure the increase is comparatively modest. The deficit, the report adds, is likely to hit £290bn in 2020 – around 14% of GDP. On issues that could hinder an economic recovery, Oxford Economics points to an extended lockdown, a second wave of COVID-19 infections, Government support being withdrawn too early and a collapse of trade talks between the UK and EU.