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There's a new warning that the coronavirus pandemic could have a devastating impact on the UK's economy. The Office for Budgetary Responsibility, the government's independent economic watchdog, says that if the lockdown lasts for 3 months the economy could shrink by 35% and unemployment could rise to 10% meaning two million people would be out of work. A forecast by the UK's tax and spending watchdog suggests the coronavirus crisis will have "serious implications" for the UK economy, Chancellor Rishi Sunak has said. The Office for Budget Responsibility (OBR) warned the pandemic could see the economy shrink by a record 35% by June. Sunak stressed that the forecast was only one possible scenario. However, he said that while the government could not protect every business and household, they came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.

"These are though times and they’ll be more to come but we came in to this crisis when they will fundamentally sound economy. I wish I was not see these numbers and DP trouble. I think this going to be hard, our economy will get a significant hit  and I said before that’s non abstract thing that people will feel that in their job and in their household incomes. Two point about generation now, I’m very much hopefull that the measures that we put in place will allow us to do what OBR said bounce back" Sunak said.  

Meanwhile Robert Chote of the office for budget responsibility (OBR) said that a three-month lockdown followed by three months of partial restrictions would trigger an economic decline of 35.1% in the quarter to June alone, following growth of 0.2% in the first three months of this year. A drop of this magnitude would be the largest in living memory.

"If you see the short of declining in GDP that we think it will be consistant with three month lockdown then you wouldn’t see a quarterly falling economy like that in living memory. The hope now that this gonna be temporary rather then permanent problem and we don’t end up staring the  long term potential of the economy" Robert Chote stated

While the UK economy would contract by 12.8% this year under this scenario, it is expected to get back to its pre-crisis growth trend by the end of 2020. The OBR stressed the actual amount of growth would depend on how long the lockdown lasted, as well as how quickly activity bounced back once restrictions were relaxed. In any case, it expects half of any sharp drop in growth in the second quarter to be reversed in the three months to September as the economy starts to recover//NK