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Today, the Bank of England projected the UK GDP is set to shrink by 11 percent for the entire year due to the outbreak of the coronavirus pandemic. The UK is now in its second national lockdown as cases continue to rise.
Bank of England Governor Andrew Bailey said: “Recent evidence from the Bank’s agents and a range of business surveys and intelligence suggests that while some businesses feel prepared for the change in trading arrangements, others – particularly smaller firms – do not feel fully ready, with Covid having hampered some preparations.
“Therefore in the central case in our November projections, adjustment by businesses to the new arrangements is assumed to lead to a further, temporary, effect on trade in the near term.
“These additional effects on trade are assumed to be temporary and to unwind over the course of six months, as businesses adjust.”
ITV’s Robert Peston warned of the devastating economic threat to the UK amid the second lockdown.
He tweeted: “We are losing more than one in every ten pounds of our income, one of the worst performances in the world.
“The fall in US GDP is forecast at ‘just’ 3.75 percent, the euro-area shrinkage is 6.75 percent and the global decline is projected at 5.25 percent.
“Given that the virus is the same virus everywhere, it is difficult to argue that the UK’s policy response to it has been economical optimal, even adjusting for the UK’s disproportionate reliance on services that thrive on the kind of human contact that the virus has made dangerous.
“It is not over till it is over, but the combination of excess deaths and excess economic loss in the UK raises big questions for the government.”
The UK has been one of the worst hit countries from the coronavirus pandemic.
More than 47,000 people have died from the virus and the total number of confirmed cases has surpassed one million.
As of today, the government has imposed another strict national lockdown scheduled to last for four weeks.
Yesterday MPs voted in favour of imposing the new restrictions despite various senior backbenchers opposing the measures.
Tory rebel Desmond Swayne in stern warning to PM as lockdown begins [REVEAL]
Brexiteer orders Boris to TEAR UP Brexit deal and walk away from EU [COMMENT]
Barnier handed huge boost as Frost’s trump card meaningless’ [INSIGHT]
While fighting the coronavirus pandemic Mr Johnson and his government have been negotiating a Brexit trade deal with the European Union.
Despite the October deadline coming and going, both sides are still in talks to secure a deal by the end of the transition period in December.
However, Mr Peston has warned the Prime Minister the economy will fall even if he gets a Brexit trade deal.
He continued: “And another thing, even if Boris Johnson gets his free trade deal with the EU, the UK’s income will fall in early 2021, says Bank of England.
“‘’UK trade and GDP are also likely to be affected during an initial period of adjustment, over the first half of next year as the United Kingdom leaves the Single Market and Customs Union on 1 January and is assumed to move immediately to a free trade agreement with the European Union’.
“Such a relief no other bad stuff is happening.”
Today, EU officials revealed they would not back down on “evolution clauses” which would ensure UK standards on issues such as the environment, workers’ rights, labour standards, taxation and state aid remain tied to the bloc.
But UK officials said these clauses are a “non-starter”.
EU chief negotiation Michel Barnier said: “Despite EU efforts to find solutions, very serious divergences remain in level playing field, governance and fisheries.
“These are essential conditions for any economic partnership.”
While the UK’s David Frost said progress had been made during two weeks of intensive talks but “wide divergences remain on some core issues”.
He added: ”We continue to work to find solutions that fully respect UK sovereignty.”
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