UK Office for Budget Responsibility Sees Economy Shrinking 11.3% in 2020

By Jason Douglas

LONDON--The U.K. economy is forecast to record its largest contraction in 300 years in 2020 and government borrowing will hit a peacetime record, the country's fiscal watchdog said Wednesday.

The Office for Budget Responsibility forecasts the economy will shrink 11.3% in 2020 and public-sector borrowing for the fiscal year ended in March will reach 394 billion pounds ($526 billion), equivalent to almost 20% of national income, Treasury Chief Rishi Sunak told lawmakers.

The figures highlight the heavy cost of the coronavirus pandemic on the U.K. economy.

"Our health emergency is not yet over and our economic emergency has only just begun," Mr. Sunak said.

The OBR's forecasts show the economy won't regain its pre-pandemic size until the final quarter of 2022, a gloomier prognosis than the Bank of England's.

Mr. Sunak set out spending plans for government departments for the next fiscal year, telling parliament that he plans to increase budgets for education and health and spend more on infrastructure projects.

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(END) Dow Jones Newswires

11-25-20 0822ET