As the nation went under lockdown in an attempt to curb the spread of coronavirus, one of the deepest recessions in the history of Britain became inevitable. The British economy is facing an unprecedented contraction with a great collapse not witnessed in the past 100 years.
We are actually in the middle of an immensely deep recession. COVID- 19 has thrown the economy into a deep freeze with closed businesses, workers stuck at home and shoppers getting access only to the necessities.
This indicates that major chunks of the British economy are shut down and the recession may turn out to be more severe with a quick drop in GDP. This means that the main economic activities such as spending, working, investing, and trading are falling for quite a long period.
If the economy stays wrapped in lockdown for 3 months, the official forecasters predict that GDP would be hit by 35pc, the largest hit for the last three centuries.
Every industry is feeling the heat of recession differently. Some people are working from home and carrying out business as almost usual. Others such as hairdressers or factory production line workers can do nothing. And some people lie in between these two extremes.
The education sector is expected to face the hardest hit. The output in education sector is expected to fall by 90pc. Food and accommodation services are next in line with a decline of 85pc as there are almost zero bookings in hotels and restaurants. The construction sector faces a hit of 70pc as builders cannot work efficiently with social distancing in the picture.
Rail and tube usage is down by more than 95pc since February. Road traffic levels are also down to 1950s levels. This reduced transport usage has brought down pollution levels tremendously.
But few industries are spared by the cruel brunt of recession. Social activity and the human health industry is anticipating a boom of 50pc. Agriculture will remain unchanged as social distancing can be easily followed in fields. Financial services have been hit quite modestly with only a 5pc fall in output as the majority of their work can be managed remotely.
In a response to the ongoing crisis, the government has stepped in to mitigate the economic fallout and protect as many businesses and jobs as possible. Despite the cost soaring into billions, significant holes will still remain in the safety net. Even with the hopes that the government interventions will help the companies to recover, many firms are still struggling hard to access support and a rising number of workers are losing their jobs.
As the goods and services demands have evaporated, shoppers are dodging the high street, the oil prices are stumbling globally and as a result, inflation has begun to tumble. However, stockpiling of sanitary products and long- life foods by people has spiraled the prices of these goods.
There are controversial predictions about UK’s economic recovery. Some say, the recovery graph will be V shaped i.e. a steep decline will be followed by a quick rebound. Others say, it will be U shaped i.e. the damage will last longer. Others yet predict a dreaded L shaped recovery where a low growth will drag down the future prospects of the economy.
A detailed report on the economy by the Bank of England predicts a shrink of 14pc in GDP this year. But it also mentions that the economy would pick up fast with a decent growth in GDP next year.
Analysts say that the government support schemes will cushion the damage and aid the recovery. These predictions bring a ray of hope in the otherwise a dark and gloomy economic scenario.