United Kingdom Economic Forecast

UK Economic Forecast

June 2, 2020

The economy shrank at the sharpest pace since the global financial crisis in Q1, weighed on by lower consumption, investment and exports amid social distancing restrictions. The downturn in Q2 will be significantly steeper as the full impact of the national lockdown is felt. In April, retail sales plummeted at a record rate, employment and wages fell, and jobless claims increased roughly 70% to over 2 million. However, the economy now appears to have bottomed out, as both the manufacturing and services PMIs picked up somewhat in May, despite languishing deep in contractionary territory. Moreover, the extension of the wage subsidy scheme through October will prevent a more marked rise in unemployment, while the gradual easing of lockdown measures—non-essential stores are set to reopen in England from 15 June for instance—should support a recovery in domestic economic activity.

United Kingdom Economic Growth

The economy will shrink markedly this year due to the impact of Covid-19 on private consumption, investment and exports, notwithstanding huge fiscal and monetary stimulus. A possible second wave of infections as the lockdown is lifted is a key risk to the outlook, while uncertainty over Brexit talks further clouds prospects. FocusEconomics panelists project GDP to contract 7.6% in 2020, which is down 1.5 percentage points from last month’s forecast, and to expand 5.9% in 2021.

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United Kingdom Facts

Value Change Date
Bond Yield0.83-3.04 %Jan 01
Exchange Rate1.33-0.35 %Jan 01

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