Swine flu could reduce 2009 GPD by 3%, say economists

Businesses need to check their contingency plans and improve home-working support systems as swine flu looks poised to reduce UK GDP by 3% this year.

Businesses need to check their contingency plans and improve home-working support systems as swine flu looks poised to reduce UK GDP by 3% this year.

An influential group of economists says the H1N1 virus could knock a further 1.9% off 2010 GDP levels.

Ernst and Young's ITEM Club made its predictions based on the assumption of a six-month pandemic starting August 2009, a 50% infection rate and a 0.4% mortality rate. Its report predicts thousands of employees will take time off work because they or their dependents are ill, posing a "serious risk to the economy".

The virus could have a stifling effect on demand, with travel, restaurants and tourism services likely to be hit. The ITEM economists say it will hit the economy hard "just as it could have been starting to recover from the credit crunch". General uncertainty over the state of the economy will lead to postponement of investment decisions.

The group suggests companies should make sure staff are able to work from home, and make the most of technologies such as video conferencing.

It adds that retail and industrial units should carefully review their stock levels and supply chains.

More generally, it predicts that the route back to economic growth lies in overseas business, not domestic growth.


Picture by Jonathan Hordle/Rex Features

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