After the corona lockdown, the British economy was unable to regain its footing. The slow development often paralyzes the willingness to invest in the future. British industry is losing hope for a quick recovery.
British industry is losing hope for a quick recovery
British industry no longer expects a V-shaped recovery from the corona recession. Production and orders have indeed recovered from the historic slump in the spring quarter, according to a company survey published on Monday by the industry association Make UK and the auditors BDO. However, the quarterly index for investment intentions fell again and almost fell to the low point marked during the financial crisis more than ten years ago. “It will be a long way back to normal trading conditions, with talk of a V-shaped recovery being nothing more than a fantasy,” said Make UK chief Stephen Phipson. Economists speak of a V-shaped business cycle when a steep decline is followed by a similarly rapid upswing.
However, it is also conceivable that the dwindling prospects of a trade agreement with the European Union after the end of the Brexit transition period will contribute to the reluctance of companies. So Phipson warned against the failure of the negotiations. For many companies that would be the “last nail in the coffin”, he said. The UK left the EU at the end of January. There is still a transition phase until the end of the year in which future relationships, for example in the area of trade, are to be clarified. If no agreement is reached, there is a risk of an unregulated Brexit.
The British economy was hit particularly hard by the corona crisis. Gross domestic product collapsed by more than a fifth in the second quarter, while German economic output, for example, shrank less than half as much at 9.7 percent. The picture looks similar in 2020 as a whole. The Organization for Economic Cooperation and Development (OECD) is predicting a decline of 10.1 percent for the British economy and 5.4 percent for the German economy.