Coronavirus: More than half of Brits expect a recession
More than half of Britons now expect the economy to tumble into recession within a year due to the coronavirus outbreak, a poll has shown, with pessimism about household finances rising at the fastest rate on record.
Pollsters Yougov said 52 per cent of people in the UK think the economy will be in recession this year. One in five fear a deeper “depression” while only one per cent of Britons think the economy will be booming.
“With unprecedented government measures to crackdown on the spread of Covid-19 shutting small and large businesses across the country and confining Britons to their homes, it’s unsurprising that consumer confidence has been knocked,” said Oliver Rowe, director of reputation research at Yougov.
Think tanks, banks and public institutions are also increasingly pessimistic about the hit to the UK economy. The Centre for Economics and Business Research (Cebr) today predicted coronavirus would cause UK output to plunge an unprecedented 15 per cent in the second quarter of the year.
The dire prediction came as the government sent letters to the British public from Prime Minister Boris Johnson warning that things are going to get worse before they get better. “At this moment of national emergency, I urge you, please, to stay at home, protect the NHS and save lives,” he wrote.
Such warnings have caused pessimism about the economy to jump. Yougov’s tracker of consumer confidence slumped 4.2 points to 103.3, it said today, the biggest monthly fall since the wake of the Brexit referendum in 2016.
“The most dramatic fall of all was seen in household finances,” Yougov said. The gauge of how households feel about their finances over the coming year fell by more than any previous month on record, 9.9 points to 93.
Kay Neufeld, head of macroeconomics at Cebr, said: “It is now highly likely that the economic crisis will lead to an increase in unemployment and a reduction in household incomes in the coming months.”
“Government mandated closures of non-essential shops, pubs, restaurants and other establishments will have a devastating effect on several industries and in particular on the leisure and hospitality sectors.”
Neufeld praised the government and Bank of England for “working hard to soften the blow,” however.
The government has said it will step in to pay 80 per cent of the wages of workers who would be laid off. The Bank of England has slashed interest rates to zero and unveiled a number of facilities to increase lending to big and small businesses.