The UK’s economy contracted by a record 20.4 percent in the second quarter, with the country in lockdown over the COVID-19 pandemic, official data showed yesterday.
“It is clear that the UK is in the largest recession on record,” the Office for National Statistics (ONS) said.
The UK officially entered recession in the second quarter after GDP contracted by 2.2 percent in the first three months of the year.
The technical definition of a recession is two quarterly contractions in a row.
The ONS said that the contraction for the first six months of this year “was slightly below the 22.7 percent seen in Spain, but was more than double the 10.6 percent fall in United States.”
DROP IN OUTPUT
It added that the UK’s dire second quarter was driven by a 20 percent drop in output in April, “the biggest monthly fall on record reflecting widespread ... declines in output across the services, production, and construction industries.”
However, the economy is beginning to rebound as the government eases its lockdown restrictions.
GDP output growth was 8.7 percent in June, the ONS said.
“The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover,” deputy national statistician Jonathan Athow said.
“Despite this, GDP in June still remains a sixth below its level in February, before the virus struck,” Athow said.
“Overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months,” he added.
The UK’s recession is its first since the 2008 global financial crisis.
The grim economic news came despite unprecedented government interventions, including spending tens of billions of pounds on job support schemes in a bid to avoid mass layoffs.
The Bank of England (BOE) is pumping out hundreds of billions of pounds in cash stimulus and has slashed its main interest rate to a record low of 0.1 percent.
ONS data released on Monday showed that about 730,000 workers have been removed from the payrolls of British companies since March.
Announcements of job cuts have become a daily occurrence, with companies expected to pick up the pace of layoffs as the government’s key employment support scheme ends in October.
The BOE expects the unemployment rate to shoot higher to about 7.5 percent by the end of the year from 3.9 percent.
The central bank also forecast that the UK economy will have contracted by 9.5 percent for the whole of this year.
It estimated that GDP will rebound by 9 percent next year.
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