Data published by economic forecasting group EY Item Club has suggested that the UK economy could contract by 8% in 2020.
It estimates a record 15% contraction in the second quarter of 2020. The EY Item Club said that the figures 'reflect a poor economic performance in April due to the coronavirus (COVID-19) lockdown, and deeper than expected contraction' in the first quarter of 2020.
In positive news, EY Item Club now predicts year-on-year GDP growth of 5.6% in 2021, a rise when compared to its previous estimate of 4.5%. However, the data also suggested that the UK economy is not expected to return to its late 2019 size until 2023.
'The impact of COVID-19 on the UK economy will depend on just how long the pandemic lasts, how many people are affected and how long restrictions to activity have to be in place,' said Howard Archer, Chief Economic Adviser to EY Item Club.
'The UK economy had been disappointingly lacklustre over the first two months of 2020, even before COVID-19 started to become a factor. After a challenging first half, our forecast shows that the UK economy is expected to start to recover in quarter three 2020 on the assumption that the government continues to gradually relax lockdown restrictions.'