20
July
Swine flu threatens deflation slump, Ernst & Young ITEM Club report warns
20 July 2009 The Telegraph
Britain risks sliding into a long deflationary recession if the H1N1 swine flu pandemic develops along lines predicted by the Government, according to the Ernst & Young ITEM Club report today.
The group said a pandemic reaching 100,00 cases a day by August, and lasting six months, would lead to a 7.5pc fall in GDP this year. The lingering damage would cause a further fall of 1.2pc next year.
"With the western world still teetering on the brink of deflation it is not an exaggeration to say that a pandemic on this scale could tip it over the edge," it said.
The figures are based on projections made by Sir Liam Donaldson, the Government's chief medical officer. The report assumes that infections will ultimately reach 50pc, with a mortality rate of 0.4pc. Most of spread will occur before a vaccine is ready. "Sir Liam is an expert on pandemics. We think his advice should be taken very seriously," said the report.
