While backward-looking data and immediate headlines have become the new normal in the past couple of weeks, it’s expected that the UK economy will soon start to rebound. While this may help to cushion the economy from the effects of a prolonged shutdown, it may not do much to reverse the effects associated with the COVID-19 pandemic and allied concerns.
Keep in mind that the pandemic isn’t the only issue plaguing the country at the moment. There’s also the uncertainties associated with Brexit, which are likely to make life harder, and tougher for many UK residents in the looming weeks.
COVID-19 and the Economic Shutdown
Many economists and financial experts around the country correctly predicted that the shutdown would severely impact the economy. But what many hadn’t foreseen was just how bad the situation would be, and the kind of mark it would leave behind in the record books. The situation prevailing today is being compared to what happened in 1974.
It was at a time when the economy declined after an oil crisis causing it to drop to -2.7%. While the UK continues to experience an overall slowdown in financial activities, the country is doing much better compared to others, such as the US and the Eurozone. One of the reasons why the country has been among the hardest hit is because the monetary activities here are mainly service-based.
People being forced to remain indoors has, thus, had an impact on the day-to-day market activities.
Will the Market Rebound in the Coming Weeks?
According to Andy Haldane, the Chief Economist for the Bank of England, the UK will soon start to experience record growth. The growth is attributed to efforts being undertaken to get the economy back on track.
Experts have gone on record to state that it’s the strength and speed of the market recovery that is now central to the country. Figures recorded over the past few months of renewed forex trading activities continue to indicate an improvement in the economy. For instance, the month of May marked growth of around 1.8%, a factor that was attributed to increased production by factories and the reopening of retail shops.
The reopening of the shops assisted in promoting the rebound, as some retail centers started to record sales volumes closer to what they filed before the countrywide lockdown. Furthermore, the figures recorded in July have indicated that another market bounce is in the offing, with the recordings showing that the UK economy will do better in the third quarter.
The UK is, therefore, likely going to record better growth numbers compared to other major economies in the world. However, the figures expected are still going to be a sixth of the levels the economy recorded in February before the virus had become widespread.
While analysts remain positive that the economy will continue to grow in the third quarter, more testing times are yet to come in the remaining months of 2020. The furlough scheme is expected to end in October, and there are currently no additional “shutdown releases” that have been announced to assist in enhancing the UK’s economic growth.