May 9, 2020 - Economy

U.K. on brink of deepest recession in three centuries

In this image, two women walk past the Bank of England in London

The Bank of England, London. Photo: Matt Dunham/AP

The United Kingdom is on track to enter its deepest annual recession in three centuries, the Bank of England forecast this week in its monetary policy report, the Financial Times writes.

The big picture: In March, the global market began seeing economic effects of the novel coronavirus outbreak morphing into a depression unlike any the world has seen in generations.

Details: The central bank sees an almost 30% drop in output in the first half of 2020, "the fastest and deepest recession since the 'great frost' in 1709," FT reports.

  • The U.K. unemployment rate is likely to reach 9% next year, the central bank forecasts, even as the government pays workers 80% of their salaries to make up for lost wages due to stay-at-home orders.
  • Near-term investments are expected to fall sharply in response to the pandemic, the bank forecasts — which will "permanently reduce" the productive capacity of the economy if not recovered after the outbreak ends.

Go deeper: Coronavirus could force the world into an unprecedented depression

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