Presented by IBISWorld UK

Economic insights: COVID-19

Economic indicators

United Kingdom GDP growth

Dampened Real GDP Growth

- 2019-20 Real GDP growth: 0.7%

- 2020-21 Real GDP growth: 1.4%

- Real economic growth expected to decline during Q2 2020.

- Expect Real GDP growth to pick up throughout the remainder of 2020-21.

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2002 2005 2008 2011 2014 2017 2020 2023

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United Kingdom Real GDP Growth

Consumer Confidence index

Falling consumer confidence

- 2019-20: 90.6 index points

- 2020-21: 90.5 index points

- Lowest level post-recovery from the GFC.

- Consumer confidence could fall further during 2020-21 depending on COVID-19 disruption.

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Consumer Confidence Index (UK)

Bank of England base rate

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Bank of England monthly average bank rateCurrent rate: 0.10% - 19 Mar 2020

Previous rate: 0.25% - 11 Mar 2020Previous rate: 0.75% - 02 Aug 2018

Factors:- Inflation below 2% target.- Low consumer confidence.- COVID-19

Limited further scope for bank rate reduction.

However, potential for further BoE

stimulus.

Oil Prices

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Average monthly oil price (%) Brent Crude

COVID-19 has acted as a catalyst for oil price decline

- COVID dampened oil demand.- Lack OPEC agreement lead to oversupply.- Price down from approximately US$60 mid

Feb to US$30 mid Mar.

Most affected industries:

- Petroleum refining in the UK.- Organic Basic Chemical Manufacturing.- Crude Petroleum & Natural Gas Extraction.

Other indicators

Financial Sector

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Pri

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Average monthly price (£) FTSE 100 index

Sharpe decline in FTSE 100

Combined effect of COVID-19 and Oil price falls.

Primary financial services- Investment Trusts, OEICs & Fund

management.- Insurance (General & Life).- Pension funding.

Auxiliary financial services- Tax Consultants.- Accounting & Auditing.- Actuarial consulting.

Health care

- Growth in total health expenditure:

- 2019-20: 4.2%

- 2020-21: 5.1%

- £5 billion COVID-19 Response Fund.

- Increased health care spending follows a sustained period of slow-growth in health expenditure.

- Industries most affected:

- Hospitals

- General Medical Practises£75.00

£95.00

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£135.00

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Total Health Expenditure (Annual)

IBISWorld’s most affected UK sectors

Industry Code (UK) Sub-sectorI Accommodation and Food Service ActivitiesN Administrative and Support Service ActivitiesA Agriculture, Forestry and FishingR Arts, Entertainment and RecreationF ConstructionP EducationD Electricity, Gas, Steam and Air Conditioning SupplyK InsuranceK FinanceQ Human Health and Social Work ActivitiesJ Information and Communication

C10-C12 Food and beverage manufacturingC13-C15 Clothing, textiles and footwear manufacturingC19-C20 Chemicals manufacturing

C21 Pharmaceuticals manufacturingC16-C17, C22-C25 Material manufacturing

C18, C26-C27 Electronics manufacturingC28-C29 Vehicle & Machinery manufacturing

C Other manufacturingB Mining and Quarrying

M & S Professional, Scientific and Technical ActivitiesL Real Estate ActivitiesH Transportation and StorageE Water Supply; Sewerage, Waste Management and Remediation Activities

G45 Motor vehicle wholesale and retailG46-G47 Food and beverage wholesale and retail

G Other wholesale and retail

Tourism

International travel to the United Kingdom

Travel bans hinder international travel

- 2019-20: 3.6% decline

- 2020-21: 4.8% decline

- Factors:- Weak consumer confidence.- Travel bans imposed on popular

tourist destinations.- Government guidance to avoid all

but non-essential international travel.

- COVID-19.10000

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International tourist numbers

9/11

Weak tourism demand

- Most affected countries include China, USA, Italy and Spain.

- Travel restrictions have spurred a wave of cancellations and a sharp drop-off in new bookings.

- The government has advised against all non-essential international travel.

- Direct impact:- Airlines- Accommodation providers- Travel agencies

- Indirect impact:- Restaurants/food-service- Cultural heritage sites- Local transport services

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46.0%

Inbound Tourism Expenditure 2018 (£22.9 billion)

USA Germany France Spain Australia Irish Republic Italy Netherlands Canada China Other

Retail and leisure

Retail and Leisure

Volatile demand variations

- The government has advised against visiting smaller public spaces such as pubs, cinemas, restaurants, theatres, bars, clubs.

- Supportive measures have been implemented:

- Business rates holiday- £25,000 grant for SME’s- Small Business Bonus Scheme

- Some major retailers have announced temporary store closures, as well as cuts to opening hours.

- Demand for Supermarkets has surged.

- IBISWorld expected a significant short-term hit to revenue and profitability for industries across retail and leisure.

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Restaurant bookings compared with same day last year

Education

Pressure on UK universities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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First year non-UK domiciled students by domicile

China India Malaysia Other Asia Total EU Africa North America Middle East Other Europe South America Australasia

In 2018-19 approximately 86,485 first year UK university students were from

China.

- UK government keeps educational centres open until as late as 23 Mar 2020.

- UK universities suspend face-to-face teaching on 17 Mar 2020.

- Most UK universalities cannot fully close due to commitments to students staying on campus.

Trade-exposed industries

Top 20 industries exporting to China

Industry code Industry name Industry Revenue (£m) Industry exports (£m) Export riskC24.410 Precious Metals Production in the UK £608.80 £30,741.00 0.25

C30.200 Railway Equipment Manufacturing in the UK £2,829.40 £200.10 0.22

C11.020 Wine Production in the UK £274.20 £60.50 0.20

C29.100 Motor Vehicle Manufacturing in the UK £52,129.70 £25,650.80 0.12

C26.600 Electromedical & Imaging Equipment Manufacturing in the UK £1,510.50 £1,443.40 0.11

C25.940 Fastener & Screw Machine Product Manufacturing in the UK £726.30 £405.30 0.11

C11.071 Soft Drink Production in the UK £4,523.50 £146.80 0.10

C23.520 Lime & Plaster Manufacturing in the UK £152.30 £29.50 0.10

C11.050 Beer Production in the UK £9,192.30 £496.00 0.10

C24.450 Other Non-Ferrous Metal Production in the UK £1,721.80 £1,333.40 0.10

C29.300 Motor Vehicle Parts & Accessories Manufacturing in the UK £14,288.30 £5,538.30 0.08

C27.120 Electricity Distribution & Control Apparatus Manufacturing in the UK £2,832.70 £1,555.20 0.08

C10.110 Meat Processing in the UK £8,399.90 £1,578.00 0.08

C10.512 Butter & Cheese Production in the UK £2,827.70 £1,191.40 0.08

C26.510 Measuring, Testing & Navigational Equipment Manufacturing in the UK £12,469.60 £6,168.80 0.07

C28.110 Engine & Turbine Manufacturing in the UK £7,952.50 £5,248.70 0.07

C25.720 Lock & Hinge Manufacturing in the UK £972.70 £393.20 0.07

C24.440 Copper Production in the UK £516.30 £533.40 0.06

C26.110 Electronic Component Manufacturing in the UK £1,861.50 £1,367.80 0.06

C21.200 Pharmaceutical Preparations Manufacturing in the UK £18,427.30 £17,445.70 0.06

Top 20 industries importing from China

Industry code Industry name Industry Revenue (£m) Industry imports (£m) Import riskC23.410 Ceramic Household & Ornamental Article Manufacturing in the UK £582.60 £310.80 0.63

C32.400 Game & Toy Manufacturing in the UK £658.40 £2,441.60 0.62

C17.230 Paper Stationery Manufacturing in the UK £348.80 £307.30 0.50

C27.400 Electric Lighting Equipment Manufacturing in the UK £2,305.00 £2,447.50 0.47

C26.300 Communication Equipment Manufacturing in the UK £3,253.60 £15,510.30 0.46

C32.300 Sporting Goods Manufacturing in the UK £663.10 £1,080.10 0.45

C26.200 Computer & Peripheral Equipment Manufacturing in the UK £1,106.00 £13,947.30 0.41

C13.920 Household Textile & Soft Furnishing Manufacturing in the UK £2,094.60 £2,014.90 0.40

C27.510 Electrical Appliance Manufacturing in the UK £1,987.70 £4,496.40 0.40

C25.720 Lock & Hinge Manufacturing in the UK £972.70 £1,380.30 0.38

C25.730 Tool Manufacturing in the UK £1,204.20 £1,072.50 0.36

C17.210 Cardboard Packaging & Paper Bag Manufacturing in the UK £4,410.00 £763.00 0.32

C25.120 Metal Door & Window Manufacturing in the UK £2,323.70 £121.60 0.32

C20.510 Explosives Manufacturing in the UK £117.60 £97.30 0.29

C23.700 Stone Cutting, Shaping & Finishing in the UK £678.00 £238.70 0.29

C23.420 Ceramic Sanitary Fixtures Manufacturing in the UK £124.60 £214.80 0.28

C26.400 Consumer Electronics Manufacturing in the UK £548.20 £5,793.50 0.27

C16.210 Veneer Sheet & Wood-Based Panel Manufacturing in the UK £1,357.70 £934.20 0.27

C25.910 Steel Drum & Similar Container Manufacturing in the UK £94.70 £135.50 0.26

C23.120 Flat Glass Shaping & Processing in the UK £1,825.80 £725.00 0.25