It’s been no secret that Covid-19 has sent the UK’s finances into disarray — but today we received a further insight into just how bad the books are looking.
Alongside Rishi Sunak’s Spending Review came updated forecasts and scenarios published by the Office for Budget Responsibility, which confirm the UK economy is set to shrink by 11.3 per cent this year — the largest economic fall in 300 years.
The road to recovery is forecast to be a long one: economic output is not expected to return to pre-Covid levels for another two years: Q4 in 2022. There is still no sign of a sharp, V-shaped recovery, but rather another dip in 2020, before lacklustre rises in 2021. The lagging recovery has downgraded the predicted size of the UK economy in 2025, now estimated to be 3 per cent smaller than the March Budget predicted.
In short, these figures add up to a less wealthy and prosperous UK in the medium term, which is going to face painful financial decisions in the next few years.
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