UK economy ‘could shrink by 14%’ in 2020

The UK could be set for the deepest economic recession since records began, according to estimates by the Bank of England.

The Bank published its quarterly monetary policy reporton 7 May 2020, in which it set out a "plausible illustrative scenario" to show the impact of COVID-19 on the UK economy.

In response to the impact on jobs and income, the monetary policy committee voted unanimously to keep interest rates at 0.1%.

In its analysis, the Bank said GDP is expected to have fallen by around 3% in the first three months of 2020, then by 25% between April and June.

As two consecutive quarters of negative growth, this would put the UK into a technical recession.

In 2020 as a whole, GDP is set to contract by 14% - the deepest annual downturn since 1706, according to reconstructed Bank of England data.

These estimates are based on social distancing measures being gradually phased out between June and September.

However, the Bank noted that the scenario is "highly conditional" and that many other scenarios for the economy are possible.

It also said the fall in economic activity should only be temporary, and GDP is expected to pick up "relatively rapidly" once social distancing measures are relaxed.

The Association of Independent Professionals and the Self Employed