FeaturedNews Extra

UK falls into worst ever recession after record 20.4 per cent GDP plunge

UK GDP shrank a record 20.4 per cent in the second quarter to plunge the country into its largest recession on record as the coronavirus pandemic decimated economies around the world.
According to the Office of National Statistics (ONS), the economy is now 22.1 per cent smaller than it was at the end of 2019.
The decline was largely driven by a 20 per cent fall in output in April, the biggest monthly decline on record, as the UK went into full lockdown.
With the easing of measures in May and June, a semblance of a recovery began, with GDP picking up 8.7 per cent in the latter.
Last quarter, GDP slumped 2.2 per cent, which was at the time the worst fall since 1979, as the disease just started to hit the UK economy.
The cliff edge drop that followed between April and June sent the UK hurtling into recession, which is defined as two straight quarters of economic decline.
The plunge was far worse than those recorded in the Eurozone, which fella 12.1 per cent, and in the US, which contracted 9.5 per cent quarter on quarter.
ONS deputy national statistician for economic statistics Jonathan Athow said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.
“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover.
“Despite this, UK GDP in June still remains a sixth below its level in February, before the virus struck.
“Overall, productivity saw its largest fall in the second quarter since the three-day week. Hospitality was worst hit, with productivity in that industry falling by three quarters in recent months.”
With full lockdown coming into force at the end of March, economists had predicted that April would bear the brunt of the damage.
Over the period, there have been record quarterly falls in services, production and construction output, especially in those industries that have been most exposed to the restrictions.
Services output decreased by 19.9 per cent, while production output fell by 16.9 per cent, and construction output contracted by 35 per cent.
Tej Parikh, chief economist at the Institute of Directors, said that the “dire figures” highlighted “the painful reality households and businesses across the country are facing”.
“The battle now is to prevent longer-term scarring from this plunge in economic activity”, he added.
Suren Thiru, head of economics at the British Chambers of Commerce, agreed that the government needed to take “bold action” to restore confidence in the economy after the fall in UK GDP.
“With restrictions steadily easing, the second quarter is likely to prove to be the low point for the UK economy.
“However, the prospect of a swift ‘V-shaped’ recovery remains remote as the recent gains in output may fade over the coming months as the economic damage caused by the pandemic increasingly weighs on activity, particularly as the government support measures wind down.
“Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy.”

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button