The theory behind a V-shaped recovery relied on the assumption that the economy would open up almost as quickly as it shut down. This did not happen. The UK moved at a much slower pace than its European counterparts exiting stringent lockdown measures. And already restrictions are being implemented again. August’s GDP figures were surprisingly dismal, and now all future monthly updates for economic growth will be affected by a longer list of restrictions that are bound to impact recovery.
As a result, scenarios for the UK’s economic recovery are being revised to reflect this. In the last day, we’ve had two updates: one from the IFS’s Green Budget (in association with Citi), the other from Capital Economics. Both show a much more difficult path to recovery than originally predicted.
The IFS lays out several scenarios, showing best and worse cases for GDP bounce-back.
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