Record plunge: UK economy posts biggest-ever quarterly shrinkage

Data shows world’s sixth-largest economy entered its first recession since 2009 due to coronavirus containment measures.

London skyline [Bloomberg]
The slump in the UK economy was the biggest since records began in 1955 and also outstripped the US downturn [August 20, 2020: Jason Alden/Bloomberg]

The United Kingdom’s economy shrank by a record 20.4 percent between April and June, when the coronavirus lockdown was at its tightest, the largest contraction reported by any major economy so far, according to official figures published on Wednesday.

The data also showed the world’s sixth-largest economy entered a recession, its first since 2009, as it shrank for a second quarter in a row.

The slump was the biggest since records began in 1955 and also outstripped the United States’s downturn. It follows a report on Tuesday that showed hundreds of thousands of people have lost their jobs.

There were signs of a recovery in the month of June alone when gross domestic product (GDP) grew by 8.7 percent from May, the Office for National Statistics (ONS) said.

That was just above economists’ average expectation in a Reuters poll for an 8 percent rise. Growth in May was revised up too.

UK GDP chart [Bloomberg]

“The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record,” Jonathan Athow of the ONS said.

“The economy began to bounce back in June … . Despite this, GDP in June still remains a sixth below its level in February, before the virus struck,” Athow added.

Last week, the Bank of England forecast it would take until the final quarter of 2021 for the economy to regain its previous size, and warned unemployment was likely to rise sharply.

The second-quarter slump in GDP was almost exactly in line with economists’ in a Reuters poll, and exceeded the 12.1 percent drop in the eurozone and the 9.5 percent quarter-on-quarter fall in the United States.

“Today’s figures confirm that hard times are here,” finance minister Rishi Sunak said. “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”

The UK’s economic output in June was 16.8 percent below its level a year earlier, compared with a 23.3 percent fall for May.

British GDP shrank by 2.2 percent in the first quarter of the year, reflecting the lockdown that started on March 24.

Source: News Agencies