The UK has entered a recession for the first time in 11 years as its economic output plunged by 20.4% in the second quarter following a 2.2% slide earlier this year, according to the Office for National Statistics (ONS). British academics have discussed the causes of the economic slowdown and the steps to halt the slump.
“I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here”, Chancellor Rishi Sunak told Sky News on Wednesday. “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will”.
Although the chancellor expressed hopes that the British economy would bounce back as soon as people get adjusted to the “new normal” after the easing of lockdown restrictions, the National Institute of Economic and Social Research (NIESR) predicts that the country’s GDP will not return to its 2019 level until 2023 or 2024.
UK May Return to Normal in Six Months
“The main reason for this recession is of course the COVID-19 pandemic crisis and the hysteria which it has instilled in the public”, suggests David Collins, professor of international economic law at City, University of London.
One of the major reasons behind the recession is the government’s decision to impose a lockdown, which at a stroke undermined the economy by depriving it of both workers and consumers, according to Alan Sked, an emeritus professor at the London School of Economics and Political Science
“Logically the best way of allowing the economy to recover is to put an end to the lockdown”, he says. “Unfortunately, however, the government like the public now sees the lockdown as a comfort blanket and many have been scared out of their wits and fear to leave their homes”.
The professor refers to broader testing in northern England, which found 14 new cases and “panicked the government into locking down” most of the region all over again in early August.
The death rate has dropped by 90%, while hospital admissions have fallen 96%, Sked highlights, bemoaning the fact that the government is already panicking over a second wave.
However, the UK was worse hit by the virus than most countries due to its population density and status as a hub for international travel, according to Collins, who adds that this was exacerbated by two factors:
· the refusal to close the border in the early weeks of the pandemic;
· the British healthcare system’s failure to conduct testing at an early stage.
While it would be an exaggeration to say that the British government handled the pandemic worse than its peers in Europe or other parts of the world, it now seems evident that the economic crisis has been more profound in the UK because of the level of panic which was deliberately created with a view to restricting the spread of the virus, the academic elaborates.
“The domestic media was quick to spread this fear and the public responded accordingly by largely refusing to return to normal activities, in contrast to the more measured behaviour seen in many other countries”, Collins highlights.
Despite the NIESR’s gloomy prognosis, the professor is optimistic, foreseeing that there will be no significant second wave of infections and suggesting that the country’s economy will slowly get back on track over the next six months.
“We can expect a return to pre-COVID levels of GDP growth by this time next year”, he believes.