London (AFP)
A historic recession threatens the UK due to the new coronavirus pandemic, a public institute warned on Tuesday as the government prepares to extend the containment, with no exit strategy yet.
With another 778 deaths announced on Tuesday and more than 12,000 in total in hospitals, the UK is one of the most affected countries in Europe. It still does not observe a decline allowing to quickly envisage a relaxation of the unprecedented measures taken to slow the progress of the Covid-19, which are very painful for the economy.
Giving an idea of the expected shock, a public body warned of a possible fall of 13% in gross domestic product (GDP) in 2020 if confined for three months followed by three months of gradual easing.
In this scenario, GDP would drop 35% in the second quarter compared to the first, before rebounding by 25% in the third and then by 20% in the fourth.
The unemployment rate is likely to soar up to 10%, or two million more unemployed, before falling to 7.3% at the end of 2020.
As a result of the cessation of activity and the massive support measures adopted to limit the damage, the public deficit would soar to 13.9% of GDP for the 2020-2021 fiscal year (which will end in March 2021 ), a record since the Second World War, according to the OBR.
For its part, the International Monetary Fund (IMF) forecasts a less severe decline, but unprecedented in a century, of 6.5% of GDP in 2020, before a rebound of 4% in 2021, according to estimates published Tuesday.
- Without Johnson -
These alarming forecasts show the radical effects on the British economy, already facing Brexit, of the confinement decreed on March 23 for three initial weeks, while the government is due to decide on its extension on Thursday.
This crucial decision should be taken in the absence of Prime Minister Boris Johnson, who is recovering after being severely struck by the virus and hospitalized in intensive care for several days.
Without a strong leader, the government is also under pressure to give indications on its strategy for ending the crisis, making it possible to envisage an economic respite, when several countries are already preparing for it.
France spoke of a lifting of restrictions and a gradual reopening of schools from May 11. Spain has conditionally authorized workers to return to factories and to construction sites. Germany must decide on Wednesday.
"The question is not to choose between economy and health", assured the British finance minister Rishi Sunak at the daily press conference of the government. "At a time when hundreds of people die every day from this terrible disease, the absolute priority must be to mobilize all our resources (...) in a national effort to beat the virus".
Beside him, a head of health services, Stephen Powis, assured that the benefits of the efforts requested "are beginning to be seen" in terms of contamination and hospitalizations, which should translate into a decrease in mortality in the weeks to come. But "it is very important to maintain these difficult measures (...) to come to grips with this virus," he added.
Outside hospitals, the situation of retirement homes, where deaths are not counted in daily reports, worries more and more. Some facility managers have reported hundreds of deaths and a cruel lack of protective equipment in their network.
The elderly are "abandoned like lambs to a massacre," denounced Tuesday Baroness Ros Altmann, who has defended the elderly and vulnerable for decades. In a column published by the Daily Mail, she spoke of "hidden silent deaths".
The authorities said they were working on faster statistics but stressed that it was a "very dispersed" sector.
© 2020 AFP