An EY report has predicted that the UK economy will shrink by 20% in April to June, putting back a full recovery 18 months later than had originally been forecast.
The UK’s economic recovery from the Coronavirus crisis could take 18 months longer than what has originally been hoped according to a leading economic forecaster.
The forecast by the EY Item Club has predicted that Britain’s economic output is not expected to return to its 2019 level until the end of 2024. EY is also predicting that Britain’s economy will shrink by a record 20% in the April to June quarter, rather than 15% as it forecast last month.
Howard Archer, the chief economic advisor to the EY Item Club, has said: “Even though lockdown restrictions are easing, consumer caution has been much more pronounced than expected. We believe that consumer confidence is one of three key factors likely to weigh on the UK economy over the rest of the year, alongside the impact of rising unemployment and low levels of business investment.”
EY also expects the unemployment rate in the UK to more than double to 9% at the turn of the year, from 3.9% in the three months to May. This will undoubtedly contribute to weaker levels of consumer spending as the jobs market starts to recover from these unprecedented times.
