The UK economy is forecasted to contract by 11.3% in 2020 according to data from Office for Budget Responsibility (OBR) published on Wednesday. This would mark the largest decline in GDP for the British economy in 3 centuries. Not only that, but it is also not expected to return to the pre-COVID-19 level before the end of 2022, debunking the optimism for a V-shaped recovery.
Government borrowing has hit a record of £394 billion adding to the ballooning debt with the Debt/GDP ratio expected to reach 91% this year. Making matters worse, unemployment is expected to reach a peak of 7.5% in the next quarter of 2021. The government has announced an extension of the furlough scheme until the end of March to prevent a further increase in unemployment.
The Chancellor of the Exchequer (Finance Minister), Rishi Sunak responded by announcing a £280 billion public spending plan. The plan will include £18 billion for testing, PPE, and vaccines, £3 billion to support the recovery of the National Health Service (NHS) amongst others.