Coronavirus: Britain enters deepest recession on record

Daniel Fowler
August 13, 2020

The UK has entered the largest recession in its history after Britain's economy declined by a record 20.4% between April and June as a result of the coronavirus.

"The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record", Jonathan Athow of the Office for National Statistics (ONS) said.

After the GDP figures were revealed, the Chancellor said: "Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will".

British finance minister Rishi Sunak said the figures showed the government's support programmes were working but job losses were inevitable. But the German economy still went into recession in the first quarter of 2020.

The UK - which has the highest death toll in Europe from the coronavirus - appears to be paying a heavier price for locking down later than its continental neighbours.

The ONS's initial second-quarter estimate shows the economy was hit across the board as the lockdown wrought havoc, with the services sector - which accounts for over three-quarters of United Kingdom output - dropping 19.9%, the construction sector falling 35% and manufacturing down 20.2%.

After a 5.2% drop in the first quarter, Spain's economy contracted a further 18.5% in the second, notably because of a 60% drop in tourism income and a fall by one third in exports.

The United States officially entered a recession in June, after it posted back-to-back quarters showing a combined drop in GDP of 10.6 per cent.

The UK economy is much more dependent than the U.S. and other Europeans countries on social spending such as eating out and going to concerts.

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Figures from the Office for National Statistics show that gross domestic product (GDP) - which simply put, means the total value of goods and services produced in a country - fell in the three months to June by 20.4 percent.

In June, there was a rise of 8.7% as lockdown was eased and focus returned to restarting the economy - but this was still 17.2% lower than levels seen in February.

(Bloomberg) - The UK economy suffered more than any major European nation during the coronavirus lockdowns, piling pressure on the government to ensure the withdrawal of its support programs doesn't derail the nascent recovery.

This follows a fall of 2.2% during the first quarter of 2020.

"The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover".

UK GDP began to contract sharply in late March, when COVID-19 was found to be spreading rapidly in the population, and the government imposed sweeping lockdown measures in response.

It estimates that UK GDP will rebound in 2021 by 9 per cent.

The Bank of England has forecast that unemployment, now at 3.9%, will reach 7.5% by the end of the year as government support schemes set up at the start of the lockdown are withdrawn.

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