The Bank of England has forecast that UK GDP will drop by 14 per cent this year, the biggest economic slump in 300 years.
The figure from its “illustrative scenario” is even worse than the one projected in an eye-opening Office for Budget Responsibility (OBR) scenario last month, which forecast that GDP would drop 13 per cent. If the Bank’s forecast comes true, it would mark the largest drop in economic output since the 18th century, according to reconstructed historical data.
The Bank said GDP contracted 3 per cent in the first three months of the year and will drop by a further 25 per cent in the second quarter. Unemployment will more than double to 9 per cent in that time, it said.
The economy will bounce back in 2021, growing by 15 per cent, the Bank said.
The scenario was published as the Bank maintained interest rates at their current record lows.