Britain’s economy is set to suffer more than £700billion in lost output caused by Covid-19, made worse by the government’s mishandling of the health emergency and Brexit, one of the ministers has warned. UK’s leading economic think tanks.
The National Institute for Economic and Social Research (NIESR) has said the UK faces worse permanent damage than other wealthy nations due to a “poor Covid-19 response” from Boris Johnson’s government.
Despite an improvement in growth prospects thanks to rapid progress in the Covid-19 vaccination programme, he said the scale of the UK’s economic collapse last year – the worst annual performance for 300 years – meant that Britain was even further behind other major economies such as the United States and Germany.
The UK’s oldest independent economic research institute said the level of GDP was on track to be nearly 4% lower in 2025 than it would have been without the pandemic. Equivalent to £1,350 per person per year, he said the cumulative loss in economic output would amount to £727billion over the five-year period.
“While all countries have seen their economic prospects deteriorate, those that have managed Covid-19 well will likely see their long-term growth prospects less deteriorated,” he said.
In a critical report for the government, the NIESR said a decade of Tory-supervised austerity cuts had left UK health and social care capacity in a ‘weak state’ as the pandemic hit .
Pointing to research showing the UK had one of the lowest numbers of hospital beds and doctors per person among advanced countries, he said: ‘Too little spending previously probably contributed to the high death rates of Covid-19 in 2020″.
Britain’s economy shrank 9.8% last year, the worst performance in the G7 as the government delayed the start of lockdowns and took longer to ease measures, as well as social spending rates higher in the UK than in other countries.
However, the NIESR said improving public health prospects from rapid progress in administering the coronavirus vaccine and the lifting of lockdown measures would support a recovery in consumer confidence and a strong rebound in the economy. economic activity this summer.
The think tank said it expected the economy to grow 5.7% this year and return to pre-pandemic levels by the end of 2022, up sharply from its previous estimates growth of 3.4%. It is, however, significantly below the Bank of England’s forecast for a recovery to pre-crisis levels by the end of this year, with growth of 7.25% in 2021 – the fastest expansion since. the Second World War.
He said the UK’s open economy would suffer from a lingering impact on global trade caused by the pandemic, while “the remaining negative consequences of Brexit” would also have an impact.
Dr Hande Küçük, Deputy Director of NIESR, said: “Beyond short-term optimism, the outlook for the UK economy is less certain given the economic and social challenges that existed before the pandemic. Our analysis at the sectoral, regional and household level shows that despite the rhetoric about “building back better”, existing inequalities could be exacerbated by the pandemic and an uneven recovery. »