The Covid-19 pandemic has led to a severe drop in economic output in the United Kingdom. The lockdown of the economy has been somewhat stricter and some containment measures remain in effect longer than in several other countries. As elsewhere, travel, tourism, hospitality, entertainment and many other sectors of the economy were hard hit. Since forecasts or scenarios are of course associated with very high levels of uncertainty at the moment, I do not publish a detailed economic forecast for the moment. The economic recovery will hopefully begin during this summer. But for the whole year of 2020, I still expect a severe recession and a contraction of the economy of around 11 percent and unemployment will strongly increase. This will be followed by a relatively strong rebound of around 8 percent in 2021. In a more dramatic scenario (for instance, if there is a second wave of the pandemic), the contraction in 2020 will be at around 14 percent. As I mentioned above, such forecasts are obviously associated with a high degree of uncertainty. Especially, there is the risk of a second wave of the pandemic. In addition, it is still not clear how exactly Brexit will occur and whether it will cause additional risks to the economy – at least in the short term. At the global scale, worldwide tensions could increase – especially between the United States and China.
While I use several models in my forecasts, my published numbers are also strongly influenced by my personal experience and judgment. One may say that my forecasts are produced by interactions between me and the machine.
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