The UK suffers much more serious economic damage than Sweden after Britain imposed a lockdown and not the Scandinavian country.
Britain’s GDP has already experienced a bigger slump this year than Sweden’s – with only one week of lockdown so far.
Both the construction and retail sectors in the UK saw the worst collapse in March, while production was the worst since the strikes in the 1970s.
In contrast, Swedish retail sales rose slightly in March as stores remained open, while construction also grew.
Sweden is expected to continue to experience a massive economic blow in 2020, but its GDP and budget forecasts are significantly less than Britain’s.
Although the UK has paid a higher economic price, the closure has not led to much more favorable figures on cases and deaths.
While Sweden’s death rate (6.08 per million in the past week) is the worst in Europe, the UK figure is only slightly better (5.57), even after two months of freezing.
In total, there were 35,704 deaths in the UK, compared to 3,831 in Sweden – more than nine times more for a population just 6.6 times the size.
This chart shows how the British economy has already been plagued by the pandemic, with a sharp decline in GDP, retail, industrial production and construction work – even if the latest figures only include a short period of closure. The unemployment rate in the UK has only increased slightly in the latest figures, but separate statistics show that the number of people applying for universal credit is increasing by almost 70 percent
This chart shows projections for the remainder of 2020, with UK GDP declining more than Sweden’s, while Britain with a larger budget deficit due to the costs of supporting the economy. Britain will also have a current account deficit, which is related to trade – which shows the flow of goods, services and money between countries. However, the EU expects Sweden to have higher unemployment this year
Last week’s per capita death rate in Britain (5.57 deaths per million) is only slightly better than Sweden’s (6.08), even after two months of incarceration. Both countries have a lower mortality rate than other European countries, as shown in this graph
Britain’s gross domestic product fell 2.0 percent from January to March, the worst slump since the 2008 global financial crisis.
The economy also shrank by 1.6 percent compared to the same period in 2019, the worst decline since 2009.
In Sweden – where the economy was already shrinking in 2019 before the pandemic started – GDP declined in the first quarter by a weaker 0.3 percent.
Economists say Sweden had a “strong start to the year” before the virus began to ravage Europe in February and March.
The period in question included only one week of full interlocking in Britain ordered by Boris Johnson on March 23.
Previously, public health restrictions started to take effect, but pubs and restaurants remained largely open until mid-March.
Figures for the April-June quarter will show the full effect of a three-month lockdown, and economists expect these numbers to be much worse.
The Bank of England has suggested that the economy could shrink by as much as 25 percent in the current quarter.
In Sweden, the government has entrusted Sweden with “individual responsibility” rather than imposing a full closure.
However, the worst is yet to come, despite the lack of quarantine measures, due to supply chain disruption and tourism collapse.
The European Commission forecast for 2020 is that British GDP will shrink by 8.3 percent this year, before recovering by 6.0 percent in 2021.
Sweden is expected to experience a 6.1 percent decline in GDP, a major recession, but smaller than the expected EU average of 7.4 percent.
Apocalyptic predictions from the Bank and England and others show that the UK is on track for the worst recession in 300 years when the Great Frost engulfed Europe
Sweden had a budget surplus before the pandemic broke out – and the country’s deficit is expected to be less than the UK’s at the end of 2020.
The European Commission expects the UK’s deficit to rise to 10.5 percent of sales in 2020, compared to 2.1 percent last year.
Sweden had a budget surplus of 0.5 percent in 2019, but that is expected to become a deficit of 5.6 percent this year.
Chancellor Rishi Sunak has extended the UK leave scheme to October 2020, with employees receiving 80 percent of their monthly salary up to a limit of £ 2500.
However, he has indicated that companies should start ‘sharing’ the costs of the scheme from August because the costs are getting out of hand.
The UK Office for Budget Responsibility expects the UK to need £ 298 billion in loans by 2020/21, of which £ 123 billion is in corona virus.
The Swedish deficit is estimated at SEK 402 billion (£ 34 billion), the country’s Debt Office said on Tuesday.
“The downturn in the economy and the support measures have led to a large deficit in the national budget and an increase in national debt,” said the minister.
The government has launched measures worth around £ 20 billion to mitigate the blow and is offering a package of around £ 49 billion in loans and guarantees.
According to the EU forecast, Britain’s total government debt will increase to 85.2 percent of GDP in 2019/20 and then above 100 percent in 2020/21.
The Swedish debt-to-GDP ratio will also rise, but only from 35.0 percent in 2019 to 42.0 percent in 2020 before ‘stabilizing’.
Chancellor Rishi Sunak speaks in the House of Commons last week where he announced that the leave arrangement would continue until October
UK retail sales fell 5.1 percent in March, the biggest drop since records began in 1996.
That included a staggering 28.4 percent drop in apparel sales, according to US figures.
Boris Johnson has said that the stores will not reopen until June, and only if public health is met.
Likewise, the closure of hotels, restaurants and bars caused a 31.1 percent decline in the accommodation and hospitality services sector, even at the start of the lockdown.
Food stores, on the other hand, saw their strongest retail growth ever, with a 10.4 percent increase related to panic buying at the start of the lockdown.
Online sales also reached a record high, accounting for 22.3 percent of all retail sales, as people switched to ordering online during the lockdown.
In Sweden, retail sales rose 0.6 percent in March 2020 compared to the same month in 2019.
However, the overall increase disguised a 3.8 percent sale of ‘durable’ goods such as clothing and furniture.
As in Great Britain, there was a sharp increase – 6.1 percent – in ‘consumable’ products such as groceries.
Sweden has not ordered a general closure of shops, although entrepreneurs have been told to introduce their own social distance rules.
Sweden is expected to suffer a smaller slump this year than Great Britain after keeping shops and restaurants open (photo, people sitting outside in Stockholm earlier this month)
The UK manufacturing industry suffered 4.2 percent lower production in March 2020, the fourth-largest since records began in 1968.
The other three were all related to strikes in the 1970s, including the ‘winter of discontent’ in 1978-79 that brought Margaret Thatcher to power the following May.
Production of machinery and equipment fell by 11.6 percent, while the furniture industry saw a decline in production of 17.0 percent.
Clothing and textile production declined by a record 18.2 percent, despite ‘anecdotal evidence’ of increased PPE production.
Nearly half (44 percent) of exporters say they have been hampered by travel restrictions related to the corona virus in recent weeks.
Alcohol sales in stores increased in March 2020, but production fell 6.9 percent as pubs and restaurants closed due to the pandemic.
The US said there was “some evidence that alcohol producers diversify to a small extent to produce hand sanitizer,” but not enough to reverse the overall slump.
In Sweden, industrial production fell by a less severe 0.7 percent or 0.2 percent compared to the previous year.
Car maker Volvo has warned against postponing truck orders and a ‘new standard’ for weaker demand due to the virus.
The Gothenburg-based company suffered the worst drop in demand since the 2008 crisis, when there were more cancellations than new full-quarter orders.
Both countries are expected to see a massive drop in exports in 2020, with a drop of 10.7 percent in Britain and 12.0 percent in Sweden.
That is potentially a bigger blow to Sweden, where exports make up a larger share of GDP than in the UK.
A construction worker at a London construction site last week, after Boris Johnson said they should be encouraged to return to work
The UK construction industry collapsed by 5.9 percent in March 2020, the biggest decline since the start of monthly records in 2010.
The slump was caused by a 6.2 percent drop in new construction work and a 5.1 percent drop in repair and maintenance work, the US said.
Construction represents about 6.1 percent of the UK economy and there were knock-on effects on the output of materials such as cement, plaster and concrete.
Boris Johnson said earlier this month that people should return to work on construction sites as the UK begins lifting the shutdown.
EU figures show that Sweden recorded 0.8 percent growth in the construction sector from February to March.
The quarterly figure was down 6.8 percent, but that reflected a major decline in January 2020 when the virus still had minimal economic impact in Europe.
Benefit claims in the UK rose nearly 70 percent in April after the pandemic forced companies to make massive layoffs.
The Office for National Statistics (ONS) said claims under Universal Credit rose by a record 856,000 from March to April, to 2.1 million.
Actual unemployment figures are less current, but figures show that 50,000 more people become unemployed from January to March.
Economists expect this figure to deteriorate, despite the government’s massive job-retention scheme to pay the wages of laid-off workers.
Early estimates for April 2020 indicate that the number of paid employees decreased by 1.6 percent compared to March, when companies started to feel a greater impact.
The number of job vacancies also decreased significantly, with vacancies falling by 170,000 to 637,000 in the three months to April.
The position in Sweden is comparable, with the full effect of the pandemic not yet visible in the monthly figures.
The monthly unemployment rate even fell to 6.7 percent in March, compared to 7.5 percent in February.
However, individual weekly figures show a rate of 8.4 percent in mid-May, suggesting that the April and May figures will look much worse.
“Since March 2020, labor market indicators have deteriorated sharply and redundancies have skyrocketed,” said an analysis by the European Commission.
“The hardest hit were employees with flexible and short-term contracts, especially in the hotel, restaurant and retail sector.”
Further figures show that in the period from March 1 to April 12, 56,133 people were notified.
The unemployment rate in Sweden is expected to be 9.7 percent for the full year 2020, worse than the expected rate of 6.7 percent in Britain.