10% is a huge hit to an economy and although the news that the UK shrank by that much in 2020 is not a surprise it is still a shock. The question now is, will the economy bounce back like a coiled spring?
Some of it certainly will if, and it is a very big if, lockdown can be ended quickly, the vaccines work and most companies have survived, that is can they keep going without government support. There is just so much pent up demand and huge savings by individuals and business, that are begging to be spent, that a rebound is inevitable.
But even in that perfect scenario a lot of the economy will not recover, transport and travel is just one example. Not only are there going to be far fewer people travelling but who is going to need a new plane anytime soon?
That output is gone and will not bounce back, many people on furlough have therefore lost their jobs but don’t know it yet. And, of course, if we then need another lockdown the circle will start again. This has therefore been a huge hit to the UK economy, not 10% but I estimate far worse than a normal recession and the economy is not out of the woods yet.
https://jonty.substack.com/
Repeat after me Jonty "We are all doomed I say doomed"
When you highlight the - 10.4% drop for UK why do you not compare this to other countries? Your beloved EU forecasts Spain is estimated 2020e as -12.5%. The engine room of the EU Germany is estimated by the EU 2020e as -5%. Maybe compare with 2020e France on - 9.8% or India on -7.7%.
Are they all doomed Jonty?
People will have an idea if their jobs will be gone or not when lockdown ends but they have time now to start thinking about plan B. Good entrepreneurs will bounce back. And yes the UK thanks to Brexit is already out there in the marketplace touting for work in such places as in India and the new ETP deal.