The UK economy is heading for its worst crash in 300 years

London (CNN Business)The UK economy is heading for its worst crash in more than 300 years because of the coronavirus pandemic, according to a new forecast from the Bank of England.

The central bank said Thursday that the British economy could shrink by 14% this year. That would be the biggest annual contraction since a decline of 15% in 1706, based on the bank’s own best estimate of historical data.

Governor Andrew Bailey said it would respond as necessary to support the economy as the coronavirus threat evolves, but stopped short of announcing any new stimulus measures.

In a report that examined the impact of the pandemic, the Bank of England said that GDP contracted by 3% in the first quarter of this year and would fall by as much as 25% in the second quarter, leaving the economy about 30% smaller than it was at the end of 2019. Unemployment is expected to increase to 9%.

The central bank expects a swift economic recovery in 2021, but it cautioned that its forecast, which assumes a gradual easing of social distancing measures and “very significant” monetary and fiscal stimulus, depends on the “evolution of the pandemic, and how governments, households and businesses respond.”

And the bank warned that it’s more likely to have underestimated the scale of the economic crash than to have overstated it.

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