UK recession is worst of all major economies

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This GDP collapse over the April-June period is the worst since the start of quarterly records in 1955 and follows a 2.2% contraction in the first quarter. Industries most exposed to government lockdowns to contain the coronavirus pandemic – services, production and construction – have seen record declines.

“Today’s figures confirm that times are tough,” UK Finance Minister Rishi Sunak said in a statement. “Hundreds of thousands of people have already lost their jobs, and unfortunately, in the coming months, many more will. But even though there are still some hard choices to be made, we will get there, and I can assure people that no one will be left without hope or opportunity. ”

Compared to the end of 2019, UK economic output fell 22.1% overall in the first six months of 2020, a worse result than Germany, France and Italy, and double the 10.6% decline recorded in the United States, the Office for National Statistics said.

“The larger contraction primarily reflects how lockdown measures have been in place for much of this period in the UK,” the ONS added.

Britain imposed a strict lockdown two weeks later than Italy, 10 days after Spain and a week after France, despite an increase in coronavirus cases. This meant that it took longer to bring the spread of the virus under control, prolonging the need for restrictions that kept many businesses shut.For example, Italy allowed restaurants, cafes and hairdressers to reopen in mid-May, while the UK waited until July 4 to do the same.

An easing of some lockdown restrictions in June, including the reopening of non-essential stores, immediately boosted the economy, with GDP growing 8.7% from the previous month, according to the ONS.

The UK economy is heavily reliant on services and household spending, both of which saw record declines in the second quarter as consumers who stayed at home spent less and saved more. In addition, millions of workers have been laid off and many of them have now been laid off.

The UK economy has lost 730,000 jobs since the coronavirus pandemic shut down businesses in March, with young people, the elderly and the self-employed most affected by the unemployment crisis.

Kallum Pickering, senior economist at Berenberg, said the GDP figures did not bode well for the rest of the year.

“Typically, recession data is undergoing significant revisions,” he said in a research note. “Nonetheless, taken at face value, the larger-than-expected contraction suggests some downside risk to our call for a 9.5% contraction throughout 2020.”

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