IBISWorld has further downgraded Real GDP growth for FY2020. Although it is expected that GDP will make a strong recovery across the year, GDP is falling faster rate than the financial crisis.
Written on April 7, 2020 by Xeinadin Group
The business rates holiday will result in £14bn reduction in tax receipts. This will result in increases in government borrowing and an increase to long-term public sector net debt.
Although there is no government data yet for unemployment in March/April 2020, IBISWorld predicts that unemployment rates could rise to as high as 10% in a worst-case scenario. Recovery however is expected to be fast barring any exogeneous shocks.
The impact of Coronavirus on manufacturing is somewhat mixed, with some sectors of manufacturing suffering heavily and others performing well, dependent upon key factors such as supply chain.
Manufacturing PMI has seen the sharpest fall in output since July 2012.
Some manufacturers are now benefitting from repurposing manufacturing to assist the NHS with production of medical equipment.
Transportation & Storage
Use of transport is down 60% across all transport types since February with tube passenger numbers falling as much as 90%.
Most affected industries: Urban Passenger Rail Operations
Intercity Passenger Rail Transport
Bus & Tramway Operations
The government has provided some support for the industry in the form of temporary nationalisation of railways and a £400m bailout for bus services.
Real Estate Activities
Social distancing and fears surrounding COVID-19 have limited demand. BoE rate changes may mean that many mortgages will be reevaluated. Mortgage repossessions generally halted by the FCA. Residential house prices were stagnant for March. IBISWorld expects house prices to decline in 2020.
Demand for warehouse space has spiked since the beginning of the pandemic. This has been driven mainly by supermarkets, online retailers and pharmaceutical third party logistic firms. REITs face a fall in real estate capital values as social distancing has been affecting retail sales and therefor retail property rental values. Office space has been less affected but it is not immune. Working from home has driven integration of technology into businesses which may reduce the demand for office space.