Britain’s economy will not recover to pre-pandemic levels until 2024 even without a second wave, according to research.
A report by accountants BDO and the Centre for Economics and Business Research (CEBR) forecasts gross domestic product (GDP) will fall 11% this year – but only if there is no large-scale second wave of coronavirus or another national lockdown.
It warns that another peak in the pandemic and lockdown would send Britain’s GDP tumbling 19% this year and see exports fall by 23%.
The study cautions that the “dual threat” of the pandemic and Brexit to international trade will hammer the UK’s export industry in either scenario.
With no second lockdown, exports will still fall by 19% this year, which will weigh on economic growth, the study found.
Exports may recover a little in 2021 before stagnating, according to the report.
Business investment will also take a blow, plunging 14% in 2020 and remaining low next year until gradually recovering by 7% in 2021 as the economy stabilises.
But in the event of a second wave and lockdown, business investment would plummet 19%, the report said.
BDO said the report highlighted “the longer-term economic impact of the pandemic and the severity of the economic damage”, though it added there were renewed hopes of a V-shaped recovery among some experts.
Bank of England chief economist Andy Haldane said earlier this month that Britain’s economy is on track for a sharp V-shaped recovery thanks to a faster-than-expected rebound.
His comments came after the Bank recently said it now expects GDP to tumble by 20% in the first half of the year – less than the 27% it predicted in its May forecast.
Peter Hemington, head of mergers and acquisitions (M&A) at BDO, said: “Businesses will be rethinking their operations and future plans in order to adapt and survive as major investments and planned M&A activity will likely be on hold until there is a more certain and stable outlook.
“We should assume that the full extent of economic damage will not be revealed until the Government’s job retention scheme comes to an end in October.”
He added: “However, with predictions of a faster, V-shaped recovery on the horizon and the Prime Minister announcing large-scale investment in infrastructure, there may be light at the end of the tunnel.”