UK hit harder by Covid than any other developed economy except Argentina, in OECD ratings
The UK has been hit harder by the pandemic than any other developed economy except Argentina, a global watchdog says.
The Organisation for Economic Co-operation and Development (OECD) said the British economy will be 6.4 per cent smaller at the end of next year than it was in the final three months of 2019.
Of the 37 OECD members, only Argentina is expected to fare worse – its forecast is 7.9 per cent smaller.
The Organisation for Economic Co-Operation and Development said the British economy will still be 6.4 per cent smaller at the end of next year than it was in the final there months of 2019
China, the centre of the pandemic, is set to be 9.7 per cent larger, accounting for a third of global economic growth next year.
OECD chief economist Laurence Boone said: ‘With the prospect of vaccines and better virus management, the picture for the global economy is looking brighter, but the situation remains precarious, especially for the low-skilled and struggling small businesses.’
Manufacturing grew at its fastest rate in 35 months in November as suppliers stockpiled ahead of the Brexit transition ending.
The IHS Markit/CIPS Purchasing Managers’ Index hit 55.6 – anything above 50 is growth – up on October’s 53.7, as companies reopened. Machinery and equipment orders for warehouses were strong.
Rob Dobson, at IHS Markit, said: ‘Whether the upturn can be sustained into the new year is highly uncertain once the temporary boosts from Brexit purchasing and stockbuilding wane.’
But sector optimism is at levels not seen since 2014. Around 61 per cent expect output to rise in the next year.
The UK economy is expected to contract by 11.2 per cent this year, on the OECD’s estimates, slightly worse than the 10.1 per cent predicted in September.
Growth next year is now expected to come in at 4.2 per cent, instead of 7.6 per cent.
The Paris-based OECD said Britain had allowed the virus to spread too extensively during both the first and second wave before imposing draconian lockdowns.
That led to a ‘particularly sudden’ shock.
Boone also noted that even though the UK had spent more on supporting its economy, this had not translated to better outcomes.
She said this may mean that ‘not all measures have been used wisely’.
The OECD has urged against cutting Government spending, warning that recovery is on very uncertain ground.
Its forecasts will be a blow to Chancellor Rishi Sunak, who hopes a strong recovery will raise tax income.
The OECD said vaccines might lead to a recovery that surpasses expectations.