Table of Contents
Economic Overview
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- GDP shrinks by 2% in Q1 2020 with UK facing significant recession
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- Figure 1: UK GDP growth rate, 2012-19, (Annual % change)
- Bank rate cut to historic low of 0.1% in response to COVID-19
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- Figure 2: Bank rate, 2008-20, by date of adjustment
- Inflation looks set to fall sharply over coming months due to falling energy prices and weak demand
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- Figure 3: Consumer Price Index, February 2019 - April 2020, (12-month Rate)
- Households gloomy about their finances
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- Figure 4: Average weekly earnings, total pay, January 2019 - March 2020, (three month average % change year-on-year)
- Unemployment rate could reach 8% by the end of 2020
Business Health
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- Business turnover continued to grow in 2019, but will slump in 2020
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- Figure 5: UK business turnover, 2019, at the start of the year, by business sector, (£ million)
- Company insolvencies rise by 7% in 2019
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- Figure 6: Underlying company insolvencies in England and Wales, Q3 2017-Q1 2020
- Profitability falls over 2019
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- Figure 7: UK PNFCs net rate of return, Q3 2017-Q4 2019, (% return)
- Business confidence suffered before COVID-19
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- Figure 8: ICAEW UK National Business ConfidenceTM index, Q1 2014 – Q1 2020
- Slight improvement in business investment intentions at the start of 2020 squashed by COVID-19 impact
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- Figure 9: UK business investment, £ million, Q1 2015 – Q4 2019
Special Focus: Utilities
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- Electricity demand falls as many factories, shops, and offices close due to COVID-19
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- Figure 10: Scenario for COVID-19 related electricity demand reduction in Great Britain, summer 2020
- Trends in household energy consumption
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- Figure 11: Average UK domestic gas and electricity consumption, 2008 – 18, (in kWh)
- Total household expenditure on energy
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- Figure 12: Total UK household expenditure on energy, 2010-19, (£ million)
- The economic contribution of the energy and water and sewerage sectors
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- Figure 13: GVA generated by the electricity, gas, steam and air conditioning supply sector, 2013-18, (£ million at current price estimates)
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- Figure 14: GVA generated by the water supply and sewerage sector, 2013-18, (£ million at current price estimates)
- Transition to low carbon economy drives capital investment in UK energy sector
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- Figure 15: Investment in the electricity and gas industries, 2011-18, (£ billion)
- …But investment in clean energy has stalled since 2016 due to changes in government policies
- Significant pick-up in clean energy investment required if UK is to meet its net zero target by 2050
- Investment in water and sewerage industry
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- Figure 16: UK capital expenditure on water and sewerage services, 2015/16-2018/19, (£ million)
- Brexit unlikely to affect energy and environmental policies
What’s Next?
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- COVID-19 derails business investment intentions and confidence
- UK economy could shrink by 14% in 2020
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- Figure 17: Forecast GDP development based on Bank of England illustrative scenario, 2020-21, (% change)
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
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