After the joy of the lockdown being lifted, this output collapse will leave firms and households exhausted
Amidst today’s manifest uncertainties, economic predictions owe more to judgment than methodology, relying more on instinct than arithmetic.
It’s clear some existing trends will accelerate after this lockdown – working via digital links from home, for instance. But the broader commercial, societal and geopolitical implications of this pandemic are, frankly, anyone’s guess.
What we know for sure is that the immediate economic hit is massive. The Office for Budget Responsibility (OBR) last week forecast a blood-curdling 35pc year-on-year drop in UK national income during the current quarter – April, May and June – with a 13pc fall over 2020 as a whole.
In his March budget, Chancellor Rishi Sunak projected GDP growth this year at a respectable 1.1pc. A month on, official forecasts presage the steepest economic decline in over 300 years.
Yes, it’s a “deliberate downturn”. The Government’s stated aim, for justifiable health reasons, is to close down vast swathes of economic activity. But the human fallout is real.
Viable businesses are being destroyed, commerce permanently shattered, with unemployment – those not furloughed, but losing their jobs outright – set to spike three-fold, to more than 10pc of the workforce.
That’s why, while Britain’s lockdown, inevitably extended for another three weeks, could soon be partially lifted. “Lives versus livelihoods” was never a simple trade-off. Easing the lockdown too early will cost lives. But easing it too late, doing even more economic damage, destroying the wealth underpinning the NHS and all our public services, will also cost lives.