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UK Economy To Grow 8-10% In Q3: NIESR

The UK economy is set to contract sharply in the second quarter due to the disruptive impact of the coronavirus, or Covid-19, but grow somewhat in the next three months, the National Institute for Economic and Social Research said Tuesday.

The think tank expect the economy to have shrunk 20-25 percent in the second quarter, the initial parts of which saw the country go into a lockdown to slow the spread of the Covid-19 pandemic.

However, the economy is forecast to grow about 8-10 percent in the third quarter, the NIESR said in its monthly GDP tracker report.

The UK economy began a gradual reopening in May.

Gross domestic product grew 1.8 percent in May from April, when the economy shrunk a record 20.3 percent, data from the ONS showed earlier on Tuesday.
The national output was still 24.5 percent smaller than in February, before the coronavirus pandemic hit the economy.

In the three months to May, the economy shrank 19.1 percent, following a 10.8 percent fall in the three months to April.

"We are doubtful about a V-shaped recovery," NIESR Senior Economist Kemar Whyte said.

The loosening of Covid-19 restrictions has provided an impetus to kickstart the UK economy, the economist observed.

"However, the measures unveiled by the Chancellor at the Summer Statement are a poorly timed change of tack and could trigger a sharp rise in unemployment, and possibly lead to permanent long-term damage to the economy," Whyte added.

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