UK will possibly struggle to dig itself out of the recession. Read ahead to know more. Also, find out how the stocks are affected in London due to the pandemic. Read ahead to see Brexit’s role as well.
The Historic Recession
The Bank Of England said recently that Britain’s economy could shrink by 14% this year. Furthermore, it will be the biggest contraction since the 15% decline in 1706. Also, the GDP could drop by 25% at the end of June 2020.
There is a 0.8% inflation rate. Claims for unemployment benefits soared by 65% to almost 2.1 million last year. Furthermore, the UK government has decided to keep the restaurants and non-essential shops closed.
Moreover, the economists in the country say that they will not get back in business the moment the government decides to reopen them.
Effect On UK’s Stock Market
Robert Wood, the chief UK economist said that the UK’s economy has collapsed. Moreover, the British pound has dropped more than 8% since the year started. It stands at $1.22. Also, it has fallen by 5% against the euro.
According to CNN, the FTSE 100 index in London has lost more than 21% year to date compared to 9% for the S&P 500. Furthermore, the FTSE 250 index of midsize British companies is down more than 26%.
The coronavirus pandemic has destroyed the global economy. Moreover, every country has faced an economic setback not seen in years or decades. Moreover, this is UK’s unexpected economic setback due to the pandemic.
UK: Brexit In The Picture
The UK Prime Minister, Boris Johnson is nailing down the terms of the country’s new relationship with the European Union by the end of this year. Moreover, UK companies can see new tariffs if the deal goes down the drain.
Moreover, it may ruin the supply chain of UK companies. Also, the making new products and services might become expensive. That is the last thing that the UK population will want at this stage.