This report by the EY ITEM Club projects a record downgrading of our near-term outlook for the UK economy, predicting UK GDP will contract by 6.8 percent in 2020, compared to the growth of 1.2 percent they had projected in January.
Key points include:
44 percent of consumer spending — the major engine of UK growth over the last couple of decades — is at risk of either being delayed or lost completely
On the assumption that the UK and EU avoid a ‘no-deal’ outcome at the end of 2020, this report expects the economy to grow 4.5 percent in 2021. Even so, the economy is not expected to return to its Q4 2019 size until 2023
The economy had been disappointingly lacklustre over the first two months of 2020 even before coronavirus started to become a factor, as a marked pick-up in consumer and business confidence resulting from reduced uncertainties following December’s general election and the UK leaving the EU with a deal on 31 January failed to translate into clearly improved activity.