No.10 has vowed to push for a “strong and swift” recovery from the coronavirus downturn as the Organisation for Economic Cooperation and Development predicted Britain could be worst-hit among G7 nations.
The government said it had already taken “unprecedented action” to shore up jobs amid a warning from the OECD that Britain’s economy will contract by between 11.5% and 14% in 2020.
The body set out two “equally possible” forecasts for all G20 nations, including a “single hit” which sees the virus brought under control and a harder “double hit” with a second major outbreak in 2020.
Under the “single hit”, Britain’s economy is predicted to shrink by 11.5%, putting it as the worst-affected of all the major economies.
Meanwhile the “double hit” resurgence of the virus would lead to 14% contraction for the UK economy, the OECD said, a figure that puts it just behind France in terms of economic impact.
Overall, the OECD forecasts that the global economy will shrink by 6% this year, before rebounding with 5.2% growth in 2021 if the virus is kept under control.
Responding to the OECD’s grim prediction on Wednesday, the prime minister’s official spokesperson said: “In common with many other economies around the world we’re seeing the significant impact of coronavirus on our country and our economy.”
But No.10 added: “Our top economic priority has always been to support people, jobs and bsuinesses through this crisis.
“The unprecedented action we’ve taken to provide lifelines to help people and business through the economic disruption will ensure our economic recovery is as strong and as swift as possible.”
And the spokesperson said: “What’s clear is that if we had not acted in the way that we did, at the scale and speed that we did, the situation would be far worse.
“That’s something that both the Office for Budget Responsibility and the Bank of England have said.”
Unemployment to soar
The OECD’s report predicts that Britain is on course for an 11.7% unemployment rate in the third quarter of this year under the “single-hit” scenario.
That puts Britain behind Spain on 22%, the United States on 13.5% and France on 12.4%.
But the UK’s joblessness rate is still higher than the Canada, with a 9.6% unemployment rate, and Germany, which is expected to see unemployment at 5.1%.
Under the “double-hit” projection, the UK’s unemployment rate would rise to 14.8%, with a higher proportion of people out of work than France on 13.7%.
Launching the report, the OECD said: “The Covid-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being.”
Responding to the report, shadow chancellor Anneliese Dodds said the figures were “deeply worrying” and showed the government had left the UK economy “particularly exposed when the coronavirus crisis hit”.
“The government's failure to get on top of the health crisis, delay going into lockdown and chaotic mismanagement of the exit from lockdown are making the economic impact of this crisis worse," she said.
“As a constructive opposition, Labour urges the government to look at much-needed solutions to minimise the economic impact. The government must speedily get on top of test, track and isolate, and swap its 'one-size-fits-all' approach to economic support for an approach focused on minimising unemployment and fostering economic recovery."
That view was echoed by the SNP’s Treasury spokesperson, Alison Thewliss, who said: “The OECD’s findings that the UK will suffer the worst economic impact of any of the developed countries must serve as a wake-up call for the UK government to act urgently, and invest to ensure a strong economic recovery, to protect jobs and rule out a return to austerity.”
Liberal Democrat acting leader Sir Ed Davey added: “The UK desperately needs a green recovery plan. We can rebuild the economy and protect the environment by creating jobs through embracing new, green technologies.”