The UK's Gross Domestic Product (GDP) is expected to contract by 10.1 percent in 2020 as the country attempts to mitigate the economic fallout of the COVID-19 pandemic and Brexit. 

That's according to a new report released by the Organisation for Economic Co-operation and Development (OECD).

It is slightly more optimistic than the 11.5 percent slump in GDP predicted in July, but the forecast remains the second worst among Europe's G20 members – with only Italy worse, with a 10.5 percent contraction.

Like many countries, the UK has been severely affected by the pandemic, with a strict lockdown hitting many sectors. 

Despite the measures now being eased, many sectors are continuing to experience a period of disruption to activity and jobs. 

As a result, unemployment is at its highest rate since 2017 (4.5 percent), according to the country's Office for National Statistics (ONS).

A survey carried out by the OECD suggests more than 75 percent of households reported a reduction in income during the pandemic and around 10 percent admitted they were struggling to pay bills. Meanwhile, 0.7 percent of people had to use food banks to survive. 

While the future remains extremely uncertain as a result of the pandemic, the OECD currently expects GDP to rebound by 7.6 percent in 2021.

How does the economy recover?

The OECD has urged the UK to agree a close trade relationship with the European Union as it nears its exit from the bloc in order to move from "crisis management" to achieving a recovery.

This agreement would "support recovery, productivity and employment for both parties," and  the body has called for negotiations to focus on trade in services, which made up 32 percent of UK exports to the EU in 2018, as well as goods, which made up 59 percent. 

The UK should also enhance communication on a "no-deal" exit from the EU by preparing targeted support to firms and workers that may suffer the most, according to the report. While well-directed public investment and higher private investment are needed to strengthen the recovery and boost productivity across the country. 

The OECD has pinpointed the importance of making sure people in activities that are lastingly impacted by the pandemic are be able to move to new activities and not become detached from the labor market.

What is the OECD?

The OECD has 36 member countries and regions, most of them toward the richer end of the development scale. Its origins stretch back to 1948, when French politician Robert Marjolin formed the Organisation for European Economic Co-operation (OEEC) to help administer U.S. financial aid to countries recovering from World War II. 

In 1961, following the formation of the European Economic Community, the OEEC reformed into the OECD and invited countries and regions outside Western Europe, starting with Canada and the U.S.. Current membership extends geographically as far as Japan, New Zealand and Chile, and its members collectively account for about half of global GDP. 

As its name suggests, the OECD promotes intergovernmental discussion of economic problem-solving, specifically around taxation and best practice.