UK Economy Deflates in 2020, Share Markets Affected

The UK’s economy has been a rollercoaster ride. This year has been tough for all the people due to the forceful impact of COVID-19. The recession has resulted in massive Unemployment, lost opportunities and lower wages. 

The International Monetary Fund (IMF) has forecast a global economic contraction of 3% in 2020. And the Office for Budget Responsibility has warned UK GDP could collapse by 35% in the second quarter.

This year Britain might witness a 13% deflation of its economy due to the government’s shutdown. This would be the poorest recession in a few centuries if it continues. However, the International Monetary Fund expected Britain’s economy to shrink by 6.5% in 2020. Although the economy is expected to revive and significant recovery is a distinct possibility if the spread of coronavirus comes to halt quickly.

UK Stock Market

Due to the current scenario, the stock market suffered. British Stocks have deteriorated in the past few weeks where 35pc wiped off the value of the market. From March 20, FTSE rose close to 20pc. Nevertheless, is this the best time to invest? Is the worst over or more is to come?

The FTSE Mid 250 index which is a capitalization-weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange posted sharper losses for a second straight session, compared with the internationally-focused FTSE 100. FTSE, which was also down 2%.

Shares in Royal Dutch Shell (RDSa.L) and BP (BP.L) fell about 5% each as oil prices dived on reports that highlighted persistent oversupply and collapsing demand concerns due to global coronavirus-related lockdowns.

“A lot of the domestic weakness is around concerns over the UK economy being locked down for longer,” said Roger Jones, head of equities at London & Capital.

There is more to come, Stocks will bounce back more. This means that the economy could suffer a more sustained hit in the near future. Though once we overcome this, the lasting effects are highly unlikely. Let us defeat this virus quickly since we cannot choose between health and economics.