UK economy could shrink by 35% in April-June period – OBR

FILE PHOTO: A man wears a mask as he walks along a deserted street amid the coronavirus outbreak in Manchester, Britain, March 19, 2020. REUTERS/Phil Noble LONDON (Reuters) – Britain’s economy could shrink by 35% in the April-June period, and the unemployment rate could more than double to 10% due […]

FILE PHOTO: A man wears a mask as he walks along a deserted street amid the coronavirus outbreak in Manchester, Britain, March 19, 2020. REUTERS/Phil Noble

LONDON (Reuters) – Britain’s economy could shrink by 35% in the April-June period, and the unemployment rate could more than double to 10% due to the government’s coronavirus shutdown, the country’s independent budget forecasters said.

The Office for Budget Responsibility said the budget deficit could hit 273 billion pounds in the 2020/21 tax year, five times its previous estimate and equivalent to 14% of gross domestic product, its biggest since World War Two.

The projection was based on the assumption that the shutdown lasts for three months followed by another three-month period during which restrictions are partially lifted, the OBR said.

It said the economy could bounce back quickly after the plunge in the second quarter.

The OBR said public sector net debt could exceed 100% of gross domestic product during the 2020/21 financial year but end it at around 95% of GDP.

Before the crisis, the OBR had forecast debt would be 77% of GDP in 2020/21.

Writing by William Schomberg, editing by Andy Bruce and Angus MacSwan

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