UK economy officially in recession after record 20 per cent slump

LONDON, Aug 12, 2020, Reuters, AP. The UK on Wednesday officially fell into recession for the first time in 11 years. The economy collapsed by a record 20.4% in the second quarter as a result of coronavirus lockdown measures imposed to contain the outbreak, DW reported.

Between April and June, household spending plunged as businesses were ordered to shut down, while industries such as construction rolled back on output and production.

“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.

Data from the Office for National Statistics (ONS) showed that the UK economy had a 2.2% quarterly contraction in the first three months of the year.

The technical definition of a recession is two straight quarters of economic decline.

The economic decline was concentrated in April — the peak of lockdown.

The ONS said the economy bounced back in June as the government started to relax coronavirus restrictions on movement

Non-essential retailers in England including clothes shops and bookstores reopened their doors on June 15.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and house-building continuing to recover,” Athow said. But “Despite this, gross domestic product (GDP) in June still remains a sixth below its level in February, before the virus struck,” he added.

The UK’s service, which makes up four fifths of the economy, suffered the biggest quarterly decline on record. Car manufacturing, meanwhile, faced its slowest production rate since 1955.

Finance Minister Rishi Sunak warned that the economic slump would lead to further job losses in the coming months.

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

The UK’s recession is deeper than those recorded by the US and other European economies, notably Germany and France.