UK economy likely contracted 2% in Q1; major Q2 contraction expected
The UK Office for National Statistics is set to release preliminary data today on the country’s year-on-year GDP growth for the first quarter.
The UK economy is expected to have contracted 2% since January. Today’s alarming numbers pale in comparison with projections from the country’s Office for Budget Responsibility, which has warned of a second quarter contraction of as much as 35% due to efforts to contain the rapid spread of COVID-19.
As Prime Minister Boris Johnson has outlined a tentative plan to reopen the country by “actively encouraging” people who cannot work from home to return to work, lawmakers continue to weigh the costs and benefits of restarting the economy—last week the country reached the grim milestone of having the highest official virus death toll in Europe.
Parliamentarians cautioning against reopening have called for increased economic relief for individuals left unemployed by pandemic-related shutdowns, but face a budget deficit projected to hit about $336 billion by the end of the fiscal year, exceeding 100% of GDP for the first time. Regardless, as the public health need to contain the virus mounts, lawmakers are likely to have no other choice but to provide economic relief to mitigate the long-term damage of a continued shutdown.
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