Vast swathes of Britain’s economy are facing the steepest downturn in more than two decades over the coronavirus crisis, according to a survey of business leaders.
Job losses have accelerated to levels last seen at the height of the financial crisis in 2009, while business activity has fallen to levels below even during that crash.
The services sector, covering everything from banking to retail to hospitality to the creative industries, has seen the sharpest drop in activity since the survey began in 1996.
It comes amid growing fears Britain is headed for one of the worst recessions in modern history, amid a collapse in demand and unprecedented lockdown that has hobbled activity across the entire economy.
Data provider IHS Markit said on Friday its closely watched purchasing managers’s index (PMI) for manufacturing and services dropped from X in February to Y in March.
The index is measured on a scale of 0 to 100, with anything above 50 signalling growth and anything below signalling contraction.
Its manufacturing survey on Wednesday showed output and new orders declining at the fastest rate in eight years due to the coronavirus pandemic.
Data provider IHS Markit said on Wednesday its closely watched purchasing managers’s index (PMI) for the manufacturing sector fell to 47.8 in March.
Bank of America on Thursday sharply downgraded its forecast for the UK economy this year, cutting its estimate of GDP growth from -2% to -7.4% in 2020.
The Federation of Small Businesses and the Corporate Finance Network this week also warned that millions of firms could collapse in weeks without a cash infusion.
The UK government has announced billions of pounds of support for businesses hit by the coronavirus pandemic, in the form of state-backed loans, tax relief, subsidies for employee wages, and grants. Rules around insolvency have also been relaxed.
However, almost a million people have already applied for unemployment benefits in just the last two weeks despite the support package.
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