The UK economy is hardest hit by the world’s developed countries because of the coronavirus pandemic, a large international study warned.
The Organization for Economic Cooperation and Development (OECD) said the UK economy is likely to decline by 11.5 percent in 2020, but may shrink by 14 percent if a second wave of Covid-19 comes later this year.
The latest global economic outlook shows that the UK’s gross domestic product (GDP) dip is even greater than that of other hard-hit European countries, in a “single-hit scenario”, with an expected decline of 11.4 percent in France, 11.1 percent in Spain, 11.3 percent in Italy and 6.6 percent in Germany.
The US is on track to shrink the economy by 7.3 percent in 2020 and 2.6 percent in China, the OECD said.
The global economy is expected to shrink by six percent this year, with all countries in deep recession, warning that the recovery will be slow and “may be interrupted.”
It predicts that global GDP will recover with an increase of 5.2 percent in 2021.
The UK economy is expected to rebound by nine percent in 2021, but in the second wave scenario, the recovery would be slow and painful, with an expected expansion of just five percent.
It said that British activity has suffered particularly badly, due to Britain’s largely service-based economy.
The services sector, which includes finance, retail, hospitality, real estate and tourism, contributes about three quarters of the UK’s GDP and has been severely affected by the lockdown restrictions.
However, many countries face massive public debt as they try to offset the economic effects of the pandemic.
OECD chief economist Laurence Boone said, “Both scenarios are sobering, as economic activity does not become normal and cannot become normal under these conditions.
“By the end of 2021, the loss of income will be greater than that of a previous recession of the past 100 years outside of wartime, with serious and long-lasting consequences for people, businesses and governments.”
She added, “An extraordinary policy will be needed to walk the tightrope towards recovery. Even if growth spikes in some sectors, overall activity remains low for a while. ”
Shadow Chancellor Anneliese Dodds said, “The OECD evidence is very worrying and shows that the UK was particularly exposed when the coronavirus crisis hit.
“The failure of the government to overcome the health crisis, delays in closing closures, and chaotic mismanagement in closing closes are adding to the economic impact of this crisis.”