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International travel could fall 60% if swine flu spreads further

The swine flu pandemic could see international travel collapse by up to 60% if  30% of the UK population contract the virus as predicted in a new report.


Economic forecasting consultancy Oxford Economics’ report, entitled Will swine flu push the world into deflation?, made the forecast from lessons learnt in Asia during the SARS outbreak in 2003 and other global pandemics.


It predicts that, should a protracted outbreak occur in the autumn, fewer than one in 200 people who contract the virus will die from it, with a 0.4% mortality rate.


However, the report also warns a pandemic could cause the global economy to fall into a deflationary cycle of falling prices, as it would come at a time when businesses were still reeling from the credit crisis.


This could cause UK prices to fall by 1% from 2010 to 2012 while the country’s GDP next year could fall by 7.5%.


The report concludes: “While the UK economy should in principle be able to cope with a swine flu pandemic, there is a significant risk that the pandemic triggers a set of unfavourable behavioural changes that tip it into deflation.


“A flu outbreak in the autumn would hit just as the economy starts to recover from the credit crunch.”

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