How Covid-19 Is affecting British economic prospects after Brexit?

After leaving the EU at the end of March 2019, the UK is making efforts in the transition period to paint a more stable economic picture for 2020. But the covid-19 pandemic has impacts on British businesses during the post-Brexit recovery and the figures showed that Covid-19's influence was worse than the 2008 financial crisis.

Signs reflect the economic slowdown

Global financial markets have risen over the past month amid hopes of a vaccine and could stem the economic collapse from Covid-19. Some analysts warn that markets cannot reflect the scale of the international recession and the risk that no vaccines are also found.

However, business surveys show that the world economy continues to narrow at a record rate this month, albeit at a slower pace than in April when most of the blockade orders of Big countries also become more difficult. After adopting stricter controls on business and social life later than other European countries, Britain's economy appears to be inferior to many other wealthy nations.

China, the first country to be attacked by Covid-19, is slowly recovering when the blockade measures are lifted. In the UK, the Purchasing Management Index (PMI), compiled from business surveys of IHS Markit and the Chartered Institute of Procurement and Supply, increased to 28.9 in May from May a record low of 13.8 in April. However, that figure is still much lower than the 50.0 mark, separating economic growth from contraction.

The first steps towards recession

Official data shows that only 9 days of blockade have caused the gross domestic product (GDP), the widest measure of the economy, to fall 5.8% in March and down 2% in the first 3 months. 

Activity has fallen across the board, with a month-long decline as much as the 18 months caused by the 2008 financial crisis. Economists regard the two consecutive quarters of narrowing GDP as a well-defined definition. 

Technique of Recession. Most forecast a second quarterly decline in three months to June, offering a limited measure of business and social life, with the Bank of England plummeting 25%.

For people restricted to homes and much of the blockade of the streets, official figures show that retail sales fell by 5.2% in March, which has been reduced by a drop in 18, 1% in April - round 1 month of consumer demand locked. Prime Minister Boris Johnson is trying to restart the retail sector from early June, allowing non-essential stores to reopen. But with rising job losses and continued health risks from Covid-19, analysts did not expect sales to soar.

The number of people claiming unemployment benefits rose nearly 70% in April, the highest level since the filing began, up to 2.1 million people lost their jobs in a health emergency. Experts said the significant increase would be much higher without a government leave plan. 

About a third of the UK workforce is receiving salary subsidies from the Treasury at a cost of nearly 22 billion pounds, with 8.4 million protected jobs and 2.3 million self-employed people requesting assistance.

Inflation in the UK fell to 0.8% in April, the lowest level in 4 years, due to the collapse of global oil prices, causing a drop in gasoline costs. The decline in demand for crude oil as the global economy fell into recession - as well as the price war between Saudi Arabia and Russia - has caused oil prices to plummet in recent months. Consumer groups have warned that prices of some products in high demand have increased during the blockade, but retailers are struggling to sell other goods to drive down general inflation.

The government has tried to bring the housing market to a deep freeze during the blockade, in addition to concerns about the economic outlook, which has caused house prices to plummet. 

With volatile trading volumes, house prices fell 0.6% in March from a month earlier, according to figures compiled by Britain's largest mortgage lender, Halifax. Some forecasts predict house prices will fall by 13% this year.

Government debt reached a record in peacetime

The government borrowed a record 62 billion pounds in April - more than expected for the whole of 2020. Budget deficits - a shortage between state spending and tax revenues - are still rising as tax receipts fell to the brink with the economy largely at a standstill, and when the Ministry of Finance stepped in with emergency financial assistance. 

The Office of Budget Responsibility, Treasury Tax and spending supervisory agency, estimates the deficit could reach nearly 300 billion pounds this year, five times the amount borrowed a year ago and nearly double that of the following. 2008 financial crisis.

The Bank of England has lowered interest rates to their lowest level in 325 years, when Britain fell into the deepest recession in more than three centuries. Aiming to reduce the disaster by lending households and businesses lower interest rates, the base rate has been reduced to 0.1% and the Bank has expanded its bond purchase program.

 Quantitative easing worth 645 billion pounds. Writing in The Guardian, Bank Governor Andrew Andrewey said they could go further if needed to support work and growth.