Economics
U.K. Economy Could Shrink 35% This Quarter if Lockdown Persists
- Watchdog sets out scenario in event of three-month lockdown
- IMF warns of bigger U.K. slump than during financial crisis
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A protracted lockdown could see the U.K. economy shrink by more than a third this quarter, increasing unemployment by over 2 million and sending the budget deficit to its highest since World War II.
The dire scenario from the Office for Budget Responsibility Tuesday came as the International Monetary Fund warned that the British economy is on course to contract more this year than it did when the financial crisis was raging.
The Washington-based lender sees gross domestic product plunging 6.5% in 2020 as a whole, compared with 4.2% in 2009. That’s still much less than the 13% projected by the OBR under a scenario where Britain remains in lockdown for three months to bring the coronavirus pandemic under control.