UK economy set to collapse warns OBR

Britain’s economy could collapse by a third (35%) during this quarter as the Covid-19 lockdown continues, according to fiscal watchdog the Office for Budget Responsibility (OBR).

The world faces the worst decline since the 1930s depressions, and unemployment would hit 10%, and the government’s deficit could surge by over £200bn.

Ayush Ansal, chief investment officer at Crimson Black Capital said, “For the Office for Budget Responsibility to be pricing in a 35% contraction in GDP during the second quarter brings home the magnitude of the economic fallout that lies ahead for the UK economy.

“As bleak as it is, many market watchers will see the scenario the Office for Budget Responsibility has arrived at as far too optimistic.

“Markets are increasingly of the view that the impending UK recession is more likely to be L-shaped than V-shaped.

“The sheer extent of the UK’s current economic displacement could lower its growth trajectory for many years to come.

“If the UK can emerge from the pandemic via a U-shaped recession, in many corners that will be considered a victory of sorts.”

When the UK coronavirus wide lockdown was implemented on 23 March, bars, restaurants, shops and many businesses closed and sacked or furloughed staff.

The lockdown is costing businesses £2.4bn each day, and in just 22 days since the government announcement, has to date has cost a staggering £52.8bn.

The Chancellor Rishi Sunak has promised tax-payers unprecedented help and wants the lockdown lifted as early as 4 May.

Sunak has warned lockdown measures could crash GDP by 30% this quarter, and there are divisions in the Cabinet to ease the lockdown for economic reasons.

However, Whitehall sources have said there is no chance of restrictions being lifted this week, as ministers are in favour of delaying this for weeks.

Sunak has warned that the UK PLC could shrink by up to 30% with millions of jobs on the line in the coming months.