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On Tuesday, the organisation charged with keeping an eye on UK government spending, and the economy more widely, published its ideas on where we might be headed.
The economists at OBR assume a three-month lockdown due followed by another three-month period when restrictions are partially lifted (so that the economic impact is halved in Q3). Then in Q4 activity returns to pre-outbreak levels – thus there is no second wave of the virus. They also assume no lasting economic hit.
The main conclusions are that real GDP falls 35% in Q2, but the economy bounces back quickly. Unemployment rises by more than 2m to 10% in Q2 (to 3.4m), but then declines more slowly than GDP recovers.
The OBR assumes the bounce-back to be so strong that by the end of 2021 GDP is 2.8% larger than in 2019, and unemployment falls to 2.1m (6%).
“Some longer-term economic ‘scarring’ is of course possible, even if restrictions are not reintroduced, but we have not attempted to quantify such effects.”
With this assumption the output losses from various sectors are:
Thus, GDP falls 35% in the Q………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
