Boris Johnson warned economy meltdown 'to get worse' in coming months amid COVID-19 crisis
BORIS JOHNSON has been warned he could see the British economy shed over 20 percent of its GDP in the second quarter of 2020 due to long-lasting effects of the coronavirus pandemic.
Economy to get worse in coming months predicts financial expert
Boris Johnson has already witnessed the British economy contract 2 percent in the first four months of the year due to businesses forced to shut down because of the coronavirus pandemic. But the Prime Minister has been warned figures are expected to only "get worse" in the coming months, with financial expert David Buik forecasting a more dramatic contraction in the coming months. Speaking to talkRADIO, Mr Buik said: "We were expecting for the first quarter of GDP for 2020 -3 percent, so this -2 percent is a little better.
"But let’s put a little meat on the bone. For the month of March itself, we were expecting -8 percent, we got -5.8 percent so you can see the business contracting dramatically.
"The service sector was down 6.1 percent, we expected that to be down -8 percent. The industrial production area and manufacturing was down 4.1 percent, we expected that to be down 5.6 percent.
"These are shocking figures, the worst since October 2008 but they’re nothing in comparison to what you are going to see in the second quarter.
"If we get anything better than 20 percent you’ve had a major result. Minus 20 percent."
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Asked about forecast suggesting the Government may be forced to hike taxes to repay for the estimated £330 billion spent to respond to the coronavirus emergency, Mr Buik insisted all Britons will have to shoulder some responsibility to help the country recover.
He continued: "Frankly, and I’m not being supercilious, if it’s only £300bn I think we’ve had a result.
"I thought it was going to be worst than that. Let’s face reality in the face - you can borrow a certain amount without too much problems.
"Interest rates are likely to be near zero for the next three years, but this stuff has got to be repaid and whether people like it or not, whatever their political persuasion is, taxes are going up."
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Mr Buik added: "The income from business will have disappeared pretty dramatically and we have to get that back.
"Everybody has to sustain a certain level. The debt mountain that could occur with people losing their jobs, the banks under pressure, houses foreclosures, all these kinds of things. that’s why it’s necessary we throw everything and the kitchen sink at the situation at the moment.
"To try and do the best we can, to make sure we mitigate the horrific losses of jobs and companies we’re inevitably going to see down in the next six months."
The dramatic forecast comes after the Office of National Statics (ONS) warned Britain suffered record monthly falls in the first quarter of 2020.
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Latest figures from the ONS found GDP fell 5.8 percent in March, services slumped by 6.2 percent and construction was hit by 5.9 percent - record monthly falls, while manufacturing also slumped 4.6 percent as the coronavirus firms its grip on the UK economy.
The first quarter fall was the worst since the end of 2008 at the height of the financial crisis, while the March monthly plunge marked a record tumble.
GDP fell by 2.0 percent in the three months to March 2020, following no growth in the three months to February, signalling the first direct impacts of the COVID-19 crisis on the economy.
The Prime Minister on Sunday announced the easing of some lockdown restrictions in a bid to have the construction industry and manufacturers start again.
But most of the country has been advised to stay home for the time being if they can work virtually, and non-essential shops are not expected to re-open until June at the earliest.