Economy

Putting the UK into lockdown was only going to send growth in one direction: down. While today’s figures from the Office for National Statistics were expected, they nevertheless confirm that the UK has experienced its largest monthly economic contraction on record. The UK economy shrank 20.4 per cent in April. Combined with March’s GDP drop (now the second largest fall since records began), the British economy is a quarter smaller than it was in February. Putting these figures alongside other monthly slumps makes for stark comparison. Hits taken for additional bank holidays and for the pain experienced during the financial crash barely compare to what’s happened in light of the

The global lockdown has seen economies shrink and unemployment soar across the world, pushing governments to borrow at rates never seen in peacetime. On Wednesday, the OECD published country-by-country estimates for the economic hit – and its projections for the UK are some of the worst. Under the scenario of no second wave (that is, assuming countries won’t need to lockdown again this year), Britain’s economic downturn is forecast to be the worst in the G7, and fourth-worst in the OECD, with an 11 per cent fall in annual GDP. In the case of a second wave, prospects still aren’t great: in the G7, Britain’s 14 per cent downturn is on

What exactly is an apprenticeship guarantee? That’s the major question to come out of Wednesday night’s Covid press conference after Boris Johnson committed to offering an apprenticeship to all young people:   I think it is going to be vital that we guarantee apprenticeships for young people. We will have to look after people across the board, but young people in particular, I think, should be guaranteed an apprenticeship. While the commitment was there, the detail was not. Is this really a guarantee for all young people? In the first quarter of this year, over 350,000 people aged 16 to 24 were unemployed (excluding those in full-time education); another 1.5 million aged 18 to 24-year-olds were

Just how bad will the Covid economic hit be? Today’s figures for the first quarter of 2020 show Britain’s economy shrunk by two per cent, but that takes into account just a few days of lockdown (and suggests that the recession started some time before). The March figure is more like it: despite only formally being in lockdown for eight days in March, the UK economy contracted 5.8 per cent that month alone. As Capital Economics puts it ‘in just one month the economy has tumbled by as much as it did in the year and a half after the global financial crisis.’ Yet some responses to today’s figures reveal a worrying degree of

Can the UK expect a V-shape recovery? The Bank of England has this morning published data revealing very deep V, suggesting a complete economic recovery in a matter of months: a 25 per cent plunge in growth in Q2, followed by a 14 per cent and 11 per cent boom in Q3 and Q4. That would be the sharpest collapse in 200 years followed by the sharpest recovery in 300 years: more of a bungee jump than a V. That’s the good news. The bad news is that it’s an ‘illustrative scenario’ rather than a forecast. It’s not just lockdown: living with the virus takes a big economic toll The

Just days after the Office for Budget Responsibility announced its economic forecasts in March, the reality of Covid-19’s impact on the UK economy sunk in, and its projection was rendered completely obsolete. A month later, with a clearer picture of the toll the virus and lockdown have taken, the OBR today released its new coronavirus analysis, showing a staggering 35 per fall in real GDP in the second quarter, and an unemployment spike of up to 10 per cent – that is, 2 million additional people out of work. A long way off its Budget 2020 forecast for the year:  As the graph above shows, the OBR’s scenario predicts a ‘V-shaped’ recovery –

We have, of course, been transformed into a nation of hoarders and panic buyers. We know this because everyone keeps telling us. There are the queues around the block, waiting for Asda to open; the tearful nurse on Twitter who couldn’t get any food after a 48-hour shift; anecdotes galore about people loading loo rolls into their trolleys by the tree trunk-load, fighting over each consignment as it arrives. How much more civilised we all were – it has been claimed – during wartime. I’m sure there are people panic-buying and hoarding vast quantities of tinned foods, but is it all quite so bad as being made out? It is

At least no one can say it isn’t bold. The United States is fiddling around with some possible cuts to payroll taxes. Most of Europe is stuck with some printed money from the ECB. But the UK is embarking on one of the most radical experiments in modern economic theory, and one that will no doubt be studied for decades to come. With his latest announcement today, a whole 48 hours after his last intervention, the Chancellor Rishi Sunak has effectively turned the UK into a wartime economy. This is the most extensive intervention in the economy ever made by a supposedly free market government anywhere in the world The