Collision of Covid-19 and Brexit fuels a £700bn blow to economic output
The UK economy has been forecast to suffer an over £700bn blow to output due to the collision of Covid-19 and Brexit, the National Institute of Economic and Social Research warned today.
The bruising figure was made worse by the government’s “poor Covid-19 response”, the think tank said, adding that it has left the UK facing more permanent damage than other rich nations.
The UK’s growth outlook has been looking slightly cheerier in recent weeks, after enduring the worst economic collapse in 300 years, thanks to the Covid-19 vaccination programme.
The NIESR said the level of GDP was on track to be almost 4 per cent lower in 2025 than it would have been without the pandemic. This is equivalent to £1,350 per person a year.
The think tank added that the collective loss of economic output would be worth £727bn in total over the five-year period.
However, it expects the economy to grow by 5.7 per cent this year and see pre-pandemic levels of recovery by the end of 2022.
The forecast is a sharp upgrade from its previous estimate of 3.4 per cent but is significantly south of the Bank of England forecast of 7.25 per growth by the end of this year.
“While all countries have seen downgrades in their economic outlooks, those which have handled Covid-19 well are likely to find their long-term growth prospects downgraded by less,” the UK’s oldest independent economic research institute said.
After a decade of austerity-driven cuts signed off by Conservative government’s had left the UK’s health and social care capacity in a “weak state”, the UK was already in a vulnerable position when the pandemic struck, the NIESR report said.
“Too little spending previously is likely to have contributed to 2020’s high Covid-19 mortality rates,” the think tank continued, detailing research that showed the UK to have some of the lowest numbers of hospital beds and doctors per person among wealthy nations.
Plunging by 9.8 per cent last year, the UK economy had the worst performance in the G7 amidst a string of lockdown delays and premature easing.
However, improvements in public health prospects would bolster a recovery in consumer confidence and invite a strong rebound in economic activity this summer, NIESR said.
And with refugees with healthcare experience able to make their way into the NHS, at a price, there remains hope for the UK’s public health service after suffering an emergency at such a scale.