The British government is facing increasing pressure to ease its near-total lockdown of the country after an influential agency said the economy could shrink by 35 per cent this quarter.
Prime Minister Boris Johnson imposed the lockdown on March 23 to stop the spread of COVID-19, which has killed more than 12,000 people in the U.K. The restrictions on travel, commerce and public gatherings will be reviewed Thursday, and the government has indicated the measures will continue for at least another three weeks.
A report issued Tuesday by the Office for Budget Responsibility, a government watchdog, said that if the restrictions were to last until June the economy would shrink by 35 per cent in the second quarter and unemployment would soar from the current rate of 4 per cent to 10 per cent. Even if the outbreak is contained over the summer, the OBR said, it will take months for the economy to recover.
Under its scenario – which is based on three months of lockdown followed by three months of partial restrictions – the economy will contract by 13 per cent this year and then grow by 18 per cent in 2021. The rate of unemployment would be 7.3 per cent in 2020 and 6 per cent in 2021.
“Evidence from past pandemics suggests that the economic impact of the coronavirus will arise much less from people falling ill or dying than from the public health restrictions and social distancing required to limit its spread,” the OBR said.
The British economy was already sluggish before the pandemic, with growth flat since January. The government is still coping with Brexit and negotiating a trade deal with the European Union, which is supposed to be concluded by the end of the year. If there is no agreement, British exports to the EU will face steep tariff and non-tariff barriers as of Jan. 1, 2021.
Several European countries have started to ease their lockdowns, including Italy, Spain, Austria and Denmark. So far the British government has been vague about its plans, and decision making has been hampered by the absence of Mr. Johnson, who is recovering from a serious bout of COVID-19 that sent him to intensive care at a London hospital last week.
On Tuesday Rishi Sunak, the Chancellor of the Exchequer, called the OBR’s scenario “deeply troubling” but did not challenge its conclusions. “This is going to be hard,” Mr. Sunak told a news conference. “Our economy is going to take a significant hit, and that’s not an abstract thing. People are going to feel that in their jobs and in their household incomes.”
He said steps the government has taken to mitigate the hardship, which include a job-retention program and loans to businesses, will help speed up the recovery and lessen any long-term damage.
Britain has almost 94,000 confirmed cases of the new coronavirus as of Tuesday, and 12,107 people have died. Both figures have been levelling off in recent days, along with hospital admissions. Health experts have said the country could be close to the peak of the outbreak but have warned against easing off lockdown measures.
There is also growing concern that the number of people dying from non-COVID-19 causes has been increasing since the lockdown. Figures released Tuesday by the Office for National Statistics showed that the total number of deaths registered in England and Wales for the week ended April 3 was 16,387 – a record, about 6,000 more than the previous high. Just more than half the additional 6,000 deaths were related to COVID-19, while the remainder were due to a variety of causes, including influenza and pneumonia.
Some health experts say the additional deaths could have been caused by mental-health issues arising from the lockdown or people not seeking treatment. David Spiegelhalter, who chairs the Winton Centre for Risk and Evidence Communication at the University of Cambridge, said he was shocked by the ONS figures. "Why the massive rise in non-covid deaths?” he asked on Twitter. “How much is collateral damage of lockdown?”
Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.