In the OECD ratings, the UK is more affected by Covid than any other developed economy except Argentina
Britain has been hit harder by the pandemic than any other developed economy except Argentina, says a global watchdog.
The Organization for Economic Co-operation and Development (OECD) announced that the UK economy will be 6.4 percent smaller by the end of next year than it was in the last three months of 2019.
Of the 37 OECD members, only Argentina is likely to do worse – the forecast is 7.9 percent lower.
The Organization for Economic Cooperation and Development said the UK economy will be 6.4 percent smaller by the end of next year than it was in the final months of 2019
China, the center of the pandemic, is expected to be 9.7 percent larger and account for a third of global economic growth in the next year.
Laurence Boone, chief economist at the OECD, said: “With the prospect of vaccines and better virus management, the picture looks better for the global economy, but the situation remains precarious, especially for low-skilled and weak small businesses.”
Manufacturing grew the fastest in 35 months in November as suppliers stocked up ahead of the end of the Brexit transition.
The IHS Markit / CIPS purchasing managers index hit 55.6 – anything over 50 is growth – and was at 53.7 in October when the companies reopened. Orders for machines and equipment for bearings were strong.
Rob Dobson from IHS Markit said: “Whether the upswing can continue into the new year is highly uncertain once the temporary stimulus from the Brexit purchase and inventory build-up wear off.”
However, industry optimism is at a level that has not been seen since 2014. Around 61 percent expect production to increase in the next year.
According to estimates by the OECD, the UK economy is expected to shrink by 11.2 percent this year, which is slightly worse than the 10.1 percent forecast in September.
Next year growth is now expected to be 4.2 percent instead of 7.6 percent.
The Paris-based OECD said the UK allowed the virus to spread too much during both the first and second waves before draconian lockdowns were imposed.
This resulted in a “particularly sudden” shock.
Boone also noted that while the UK had spent more to support its economy, it did not produce better results.
She said this could mean that “not all measures have been used wisely”.
The OECD has urged not to cut government spending and warns that the recovery is on very uncertain ground.
His predictions will be a blow to Chancellor Rishi Sunak, who hopes a strong recovery will boost tax revenues.
The OECD said vaccines could lead to a recovery that exceeds expectations.