UK warned it will face its biggest recession in 300 years if lockdown continues into the summer - here’s why
The coronavirus outbreak has had a huge impact on day-to-day life in many ways, and the UK is expected to remain under lockdown for several more weeks.
While adjusting to life in isolation has been difficult, businesses have been hit particularly hard by the restrictions, with the budget watchdog now warning the country could suffer its biggest recession in 300 years if lockdown continues into the summer.
What happened to the economy in 1709?
The Office for Budget Responsibility has said the economy could shrink by 35 per cent this spring, with unemployment levels reaching 3.4 million over the coming months - its highest level since the 1990s.
The struggling economy has sparked comparisons to the financial crash in 2008, and the Great Depression of the 1930s, but experts are now predicting the outcome will be much worse.
Experts now believe the UK is headed for its biggest economic slump since 1709, when the country was hit by a deep freeze that spread across Europe.
Temperatures plummeted on 5 January, bringing with it the worst winter in 500 years and freezing over several countries, including France, England and Russia.
The ‘Great Frost’, as it came to be known, lasted for three months and sparked food shortages, thousands of deaths in France, and a huge deficit to the economy.
Is the UK heading for an economic crash?
The coronavirus pandemic could see the economy shrink by a record 35 per cent by June, the Office for Budget Responsibility (OBR) has warned.
A drop this big would mark the largest decline “in living memory”, Robert Chote, chairman of the OBR has said.
However, Chancellor Rishi Sunak stressed that this forecast is just one possible scenario, and it merely suggests the scale of what the country is currently facing will have “serious implications for our economy”.
He said: “We came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.
“Our planned economic response is protecting millions of jobs, businesses, self-employed people, charities and households.
“Our plan is the right plan.”
Mr Sunak assured that the government would not stand by and will act to support the economy, adding that the OBR expects the economic impact of the pandemic to be temporary.
When will the UK economy recover?
Despite being forecast for a significant decline, the UK is expected to return to its pre-coronavirus economic growth by the end of this year, with the OBR stating this amount will depend on how long the lockdown lasts.
The OBR predicts that any drop in growth will be reversed in the three months to September, as the economy starts to recover.
However, it warned that the pandemic may have a more lasting impact on unemployment, which is estimated to rise to 3.4 million by the end of June.
Unemployment levels are currently 1.3 million, marking a rise from 3.9 per cent to 10 per cent.
Unemployment rates are expected to remain high until 2023, before dropping back to four per cent, according to the OBR’s forecast.
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