By Thomas Marks
The coronavirus has had an impact on every economic sector in every country around the world on an almost unimaginable scale.
There is expected to be a fall of 9.5% in the UK’s gross domestic product (GDP), making it the worst UK recession since the post-first world war slump between 1920 and 1926, where there was an estimated 25% drop for two years. In the second economic quarter of 2020 UK GDP fell by 20% in a matter of months rather than years.
Many comparisons have been made since the first major outbreaks of covid-19 to the 2008-2009 financial crisis, the most recent recession. It certainly had an impact around the world, as covid-19 has had. But the biggest fall in quarterly UK GDP then was around 2% and its effects were still be felt just before the pandemic with employment levels still recovering.
This time, the rebound from the recession is far quicker. In 2008 it took over five years at less than a 1% average rate of growth from the lowest point during the economic crisis to get to pre-recession levels. In the second and third quarters of 2020 there was 14% growth.
Some of this rapid increase in growth is due to companies producing increased amounts of products through autumn and winter months to export them abroad before the deals made between the UK and the EU came into effect on the first of January.
These new regulations on checks at the border on both sides of the channel could have effects on the flow of exports abroad as well as the import of primary products which can be refined or manufactured in the UK into high quality products for many different sectors from medicines to aeronautical parts.
The bottleneck it creates will impact the growth of the economy compared to the end of 2020, these new problems were seen with the discovery of the new variant in the south east of England which led to France closing its borders to the UK causing a massive distribution problem with fresh produce destined for European dishes in time for Christmas being held up the UK.
Though it lasted a little less than a week, this had a great impact on many businesses and farms across the country during the busiest time of year, as well as hundreds of truck drivers not getting home for Christmas liked they had hoped for. This problem could be a sign of what is to come for the UK and the reliance on the trade between us and Europe for many years to come.