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14 April 2020updated 06 Oct 2020 9:45am

Evening summary: OBR and IMF paint grim economic picture

By Samuel Horti

Today was a tale of two forecasts (or as the Office for Budget Responsibility (OBR) would be quick to point out, a tale of one forecast and one “reference scenario”). First, the OBR said that unemployment could hit 10 per cent in the first half of this year, while GDP could fall by 35 per cent, which would be the largest single-quarter contraction since 1908. The economy would bounce back quickly from such a hit, but UK GDP would still fall by 13 per cent in 2020, according to the OBR “scenario”, which assumed three months of heavy restrictions on the UK public, to be eased over the following three months.

Chancellor Rishi Sunak was keen to stress that the OBR figures were just one possible future, and “may not even be the most likely scenario”. But he admitted he was “deeply troubled” by the figures, and said the public should expect “tough times” ahead. He also used this afternoon’s coronavirus briefing to dismiss the idea of a universal basic income, saying universal credit (UC) was “working well”. Earlier in the day, Work and Pensions Secretary Therese Coffey had revealed the number of people claiming UC had risen by 1.4 million since the coronavirus crisis began.

The second forecast, this one from the International Monetary Fund (IMF), warned that the coronavirus pandemic will cause the deepest recession since the Great Depression. The global economy will shrink by 3 per cent in 2020, the IMF said, while the UK’s economy would contract by 6.5 per cent, compared with the IMF’s previous forecast of 1.4 per cent growth. The prediction was not as bad as the OBR’s scenario, but it still makes grim reading. 

In other news, the total number of weekly deaths recorded in England and Wales soared to a record high, with 16,387 deaths from all causes registered in the week ending April 3, 2020, the highest since the Office for National Statistics (ONS) began tracking weekly totals in 2005. ONS data also showed one in ten coronavirus-related deaths are occurring outside of care homes, while health officials pledged to record the number of deaths in care homes daily in the future.

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