Coronavirus could cause UK GDP fall by 13 per cent

According to a scenario published by Fiscal watchdog the Office for Budget Responsibility on Tuesday , United Kingdom's economy could shrink by 13% in 2020 in the case of Coronavirus lockdown for 3 months


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Coronavirus could cause UK GDP fall by 13 per cent

According to a scenario published by Fiscal watchdog the Office for Budget Responsibility on Tuesday , United Kingdom's economy could shrink by 13% in 2020 in the case of Coronavirus lockdown for 3 months .

The Office for Budget Responsibility also said the resulting 13% fall in annual GDP in 2020 would comfortability exceed any of the annual falls around the end of each financial crisis or world war .

In the model real GDP could fall 35% in the second quarter , but bounce back quickly once the restrictions are eased .

The OBR said , Unemployment could also rise by two million to hit 10% in the second quarter .

The UK government has already announced huge public spending measures to help those out of work and support business . which will lead to a large increase in predicted borrowing .

The scenario envisages a net borrowing increase of 218 billion pounds in 2020 to 14% of GDP , the largest single year deficit since world war 2 .

According to the model , public sector net debt could peak at over 100% total economic output during the year , ending 2020 at 95% .

The OBR also warned that the scenario should not be taken as our view of the most likely path for the economy which is highly sensitive to change in underlying factors .

It explained that it would not rerquire large changes tro the highly uncertain assumptions about the prospects of individual sectors to altered the estimated fall in GDP significally and it is quite plausible that the impact could be materially smaller or larger than our current scenario .

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