THE UK economy is predicted to be the hardest hit of all developed nations as a result of coronavirus, a new report has found.
The Organisation for Economic Co-operation and Development (OECD) released analysis this morning showing the UK is on track for a decline in GDP of 11.5% this year.
The organisation's chief economist said that all countries should prepare for "dire and long-lasting consequences for people, firms and governments" as a result of the pandemic.
It outstrips that of Germany, ItaLy, Spain and France which are forecast for declines in national income of 6.6%, 11.3%, 11.1% and 11.4% respectively.
If a second wave of coronavirus hit the UK, the economy could shrink even further, with experts forecasting a slump of up to 14%.
Across the globe, the OECD said the world economy is likely to shrink by 6%, or by 7.5% if a second wave of Covid-19 emerges.
OECD chief economist Laurence Boone said: “Both scenarios are sobering, as economic activity does not and cannot return to normal under these circumstances.
“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”
She added: “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.
“Governments can provide the safety nets that allow people and firms to adjust, but cannot uphold private sector activity, employment and wages for a prolonged period.”
Ms Boone added that a vaccine against the virus must be "distributed rapidly worldwide", adding: "Otherwise the threat will stay. Likewise, resuming a constructive dialogue on trade would lift business confidence and the appetite for investment.
“Governments must seize this opportunity to engineer a fairer and more sustainable economy, making competition and regulation smarter, modernising government taxes, spending, and social protection. Prosperity comes from dialogue and cooperation. This holds true at the national and global level.”
SNP MP Alison Thewliss, the party's shadow chancellor, said the stark warning must be a "wakeup call" to the government.
She said: "The coronavirus pandemic has had a devastating impact on the economy and businesses, however, this Tory government’s stewardship has only compounded matters, as we now head for economic catastrophe – with GDP slumping, businesses on the brink, and thousands of jobs on the line.
“If the UK government is serious about recovering from this health crisis then it must follow the lead of other countries – including Germany, which announced a £116.4bn economic recovery package – rather than cutting support for businesses and workers in the coming months through its furlough scheme, and offering no answers on the future of the scheme for the devolved nations."
She said that the current devolved arrangements "were not designed for a health emergency and an economic crisis of this scale" and said Scotland must have "greatly enhanced financial powers" to be able to tackle the problems effectively.
“If the Tories do not abandon failed policies of the past – and also refuse to devolve powers – then they risk ushering in a new era of austerity that will decimate the economy, public services and people’s living standards for years to come." she said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel