Covid’s full cost to the UK economy is still being counted | Larry Elliott

Covid's full cost to the UK economy is still being counted | Larry Elliott

This has been a stinker of a year. More than 54,000 people have died from Covid-19, and the latest forecasts, due out on Wednesday, will show the economy on course to shrink by a tenth or more.

The grim news on growth and unemployment will provide the backdrop to Rishi Sunak’s announcement of the Treasury’s spending plans for 2021-22 – and a warning from the chancellor that he will need to take action to bring down the government’s budget deficit next year.

When the pandemic led to the first lockdown in the spring, the thinking was that the UK would have a classic V-shaped recession and activity would be back to its pre-crisis levels by the turn of the year. In the end, the recession has been less deep, but more protracted.

Economic historians don’t compile lists of the 10 worst years for the economy in the way that rock critics list their top Bob Marley songs (No Woman, No Cry, according to our own Alex Petridis) but if they did, 2020 would be right up there.

To be sure, there would be competition for the No 1 spot. Few alive can remember 1919, but in that year, a Britain still shaken by the losses in the first world war suffered more than 200,000 deaths from Spanish flu. The benefit cuts row that broke the minority Labour government and forced the UK off the gold standard meant 1931 was not exactly pleasant either.…

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