The Organisation for Economic Co-operation and Development has warned that the United Kingdom is likely to the hardest hit economically among the richer countries because of the novel coronavirus pandemic.
The OECD said that that there is likely to a drop of 11.5 per cent in Britain’s economy for 2020 which will be slightly higher than the expected drops in economies such as Germany, France, Spain and Italy.
However there can be a contract of about 14 per cent in the UK economy if here is a second wave of Covid-19 outbreak. “The crisis will cast a long shadow over the world,” the OECD added.
There could be contractions of 11.4 per cent in France, 11.1 per cent in Spain, 11.3 per cent in Italy and 6.6 per cent in Germany in the eventuality of a “single-hit scenario”, with no second peak, it said.
Since the UK’s economy is largely dependent on its service sector, therefore it was particularly hit hard because of the government’s lockdown restrictions, said the OECD in its latest assessment. About three-quarter of the UK’s GDP is accounted for by the services sector of the country which includes its financial services, hospitality and tourism.
The UK was not the only one to suffer, said UK Chancellor Rishi Sunak in response to the think tank’s report.
“In common with many other economies around the world, we’re seeing the significant impact of coronavirus on our country and our economy. The unprecedented action we’ve taken to provide lifelines that help people and businesses through the economic disruption will ensure our economic recovery is as strong and as swift as possible,” he said.
“Today’s evidence from the OECD is deeply worrying, showing the UK was particularly exposed when the coronavirus crisis hit. The government’s failure to get on top of the health crisis, delay going into lockdown and chaotic mismanagement of the exit from lockdown are making the economic impact of this crisis worse,” said Shadow chancellor Anneliese Dodds.
There was a marked receding of the pandemic in many countries, the OECD said, and hence many of the countries have started economic activity which is also picking up. However a short term recovery was not expected by the OECD. The body pointed out that the outlook for public health was extremely uncertain.
The pandemic would have “dire and long-lasting consequences for people, firms and governments,” said OECD chief economist Laurence Boone.,
“Extraordinary policies will be required to walk the tightrope towards recovery. Even if growth does surge in some sectors, overall activity will remain muted for a while,” she added.
Two scenarios for the current year was examined by the OECD depending on the manner of further unfolding of the pandemic – with the consideration of a second wave of the pandemic hitting the world prior in this very year. The OECD noted that if there is a second wave of the pandemic, even deeper declines in economic activity than the UK this year would result in two countries – France and Spain.
(Adapted from BBC.com)