UK economy to slowly recover from COVID: budget office By Reuters

LONDON (Reuters) – The UK economy is not expected to rebound quickly as it rebounds after the shutdown of its coronavirus, which could have cut production by more than 30% last month, said the head of the forecast office. budgetary to Country.

Robert Chote, president of the Office of Budgetary Responsibility (OBR), said April was probably the bottom of the collapse, as the government prepares to gradually ease its blockade restrictions.

"We know that the economy, probably at its worst level in the last month, could have been a third smaller than it normally would have been, in terms of the production of goods and services and citizens' expenses, "he said on BBC television.

"But it should be the worst."

Britain, like many other countries, has shut down much of its economy to slow the spread of COVID-19.

Last month, the OBR said Britain's gross domestic product could drop 13% in 2020, its biggest collapse in more than 300 years.

Chote said that a quick V-shaped recovery included in this report was only intended to be an illustrative scenario to show the blow to public finances.

"In practice, I think you probably don't see the economy recovering as we would have thought otherwise by the end of the year, assuming that, but a recovery slower, "said Chote.

In addition to the pace of the lifting of the blockade, the speed of recovery would depend on consumer caution and the adaptation of businesses to economic changes, such as increased demand for online retail and the decrease in the number of restaurants.

Chote said Britain will not necessarily have to go back to severe cuts in public spending to cope with the increase in debt that will emerge from its response to the coronavirus crisis.

Key factors include the permanent damage to the economy, the level of interest rates on the public debt, which are currently in the background, and how much the country wants to spend on health and ;other services.

"But an extended period of austerity after a financial crisis is not over," said Chote, adding that tax increases were another option.

Prime Minister Boris Johnson has declared that he will not lead Britain to a new period of austerity after previous Conservative-led governments tried to restore public finances by cutting spending in many areas of public services.