United Kingdom plunges into largest recession on record

Marco Green
October 26, 2020

GDP output growth was 8.7 percent in June as the economy slowly emerged from its lockdown implemented in late March, the ONS said.

The statisticians attributed Britain's dire second quarter to 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".

The number of self-employed people fell by a record amount in the three months to June, led by older workers, while the number of employees rose - something the ONS said was partly accounted for by workers reclassifying themselves as employed.

Ross Counsell, chartered surveyor and director at Good Move, said: "The UK is now in recession for the first time in 11 years due to the impact COVID-19 has had on the economy".

United Kingdom gross domestic product (GDP) is estimated to have fallen by a record 20.4% in Quarter 2 (Apr to June) 2020, marking the second consecutive quarterly decline after it fell by 2.2% in Quarter 1 (Jan to Mar) 2020, according to the Office for National Statistics (ONS).

Data released by the Office for National Statistics (ONS) showed a leap of 81,000 last month alone despite continuing support for employers via government loan vehicles and the Job Retention Scheme for furloughed workers.

"Despite this, GDP in June still remains a sixth below its level in February, before the virus struck".

Chancellor of the Exchequer, Rishi Sunak, said: "I've said before that hard times were ahead, and today's figures confirm that hard times are here".

The number of people in work tumbled by the most for a decade in the second quarter of 2020 as lockdown destroyed hundreds of thousands of jobs and sparked an exodus of migrants.

"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".

The second-quarter slump in GDP was nearly 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.

The Bank of England (BoE) is meanwhile pumping out hundreds of billions of pounds in cash stimulus and has slashed its main interest rate to a record-low 0.1 percent.

Around 730,000 workers have been removed from the British payrolls since March.

Economists polled by Reuters had expected the unemployment rate to rise to 4.2 per cent.

Announcements of job cuts have become a daily occurrence, with department store chain Debenhams axing 2,500 posts on Tuesday.

The unemployment rate unexpectedly held at 3.9 per cent but that reflected an increase in people who had given up looking for work and who were therefore not considered to be unemployed, and people who said they were in work but were getting no pay.

Other reports by Click Lancashire

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