The UK economy could take until 2024 to regain its size before the coronavirus lockdown, according to an analysis by the EY Item Club.
Forecasters, who use an economic model similar to the Treasury’s, suggest that unemployment will drop from 3.9% to 9%.
They also estimate that the economy will shrink 11.5% this year, worse than the 8% they predicted just a month ago.
Consumers have been more cautious than expected, they said, as weak business investment is believed to dampen growth.
However, forecasters say it is still early days and useful data has only recently been made available.
“Unsurprisingly, without hard data, a wide range of views on the performance and outlook for the UK economy have emerged,” said Mark Gregory, UK chief economist at EY.
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Last week, Bank of England chief economist Andy Haldane told MPs the UK economy had ‘recouped’ about half of the production decline recorded during the peak of the coronavirus lockdown in March and April.
There had been a V-shaped “rebound”, he said, referring to the shape which indicates a rapid economic recovery.
Last month, Mr Haldane said the economy was “on track for a rapid recovery”.
However, other economists have expressed doubts about the potential for such a rapid recovery in activity.
“Even as foreclosure restrictions ease, consumer caution has been much more pronounced than expected,” said Howard Archer, chief economic adviser for the EY Item Club.
“We believe consumer confidence is one of the three key factors that are likely to weigh on the UK economy for the rest of the year, alongside the impact of rising unemployment and low levels of investment companies.
“The UK economy may have passed its low point, but it looks increasingly likely that the recovery will be much longer than expected. “