A recent Reuters poll forecasts that the UK economy could take at least two years to recover to pre-pandemic levels of growth and suffer a deeper than expected contraction in Q4 2020 on account of the second wave of the pandemic. According to economists, Britain’s economy could contract by 2.7% in Q4 2020, a more severe contraction than the 2.5% forecast previously.
The recent resurgence in cases across Britain with the onset of winter has forced the government to bring back lockdowns and restrictions, which have hit economic activity once again. The services sector in the country has been impacted severely as hospitality businesses had to shut down their operations to contain the spread of the pandemic.
For the entire year, the GDP is expected to come in at -11.2% but could register a growth of 5.3% in 2021. Economists expect the economy to grow in the next quarter, with the GDP for Q1 2021 expected at +1.7%.
18 of the 26 economists who participated in the poll expect that it could take a minimum of two years for Britain’s GDP to return to pre-pandemic levels. On a positive note, however, the poll reveals a reduced likelihood for a no-deal Brexit scenario, from 40% in the previous month to 35% in the latest edition of the poll.