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British Economy Improved 16% in Third Quarter but Highest Debt in Six Decades

The Office for National Statistics (ONS) has revealed the extent of the damage done by this year’s first lockdown, as well as showing how the country bounced back in the second quarter.

The Full Figures

Among the interesting figures, we can see that the UK’s GDP rose by an estimated 16% in the period between July and September.  This is the biggest expansion of the country’s economy ever recorded in a single quarter since records began in 1955. It tied in with the easing of the initial lockdown restrictions.

Yet, it was still 8.6% below where it was at the end of 2019. Another point covered in this study was the growing size of the national debt. The ONS suggest that this is now sitting as £2.1 trillion, which is higher than it has been since the early 1960s.

Looking at the first six of months of 2020 overall, the cumulative drop in the nation’s GDP was 21.2%. The first quarter saw a fairly modest drop, as the lockdown began in March. However, in the second quarter of 2020 the GDP collapsed by 18.8%. 

If we look at the fact that the UK’s economy plummeted by 21.2% in the first half of the year, only France and Italy were close to being this bad, with 18.9% and 17.8% falls, respectively. The numbers also suggest that the recovery has been faster in these countries than in the UK.

The ONS points out that there are a few possible reasons for the different ways that the virus has hit other countries. These include how it was spread and what lockdown measures were put in place. They also stated that the impact of the crisis may be measured differently in other countries.

A Look Ahead

The numbers for the third quarter are better than expected, raising hopes that the worst of the crisis is over. The ONS had predicted 15.5% growth for these three months, when it came in at 16%. 

In the same way, the drop in the GDP witnessed in the second quarter was lower than had been expected, with a 19.8% fall predicted and 18.8% actually recorded. Nevertheless, the rising rate of businesses using the debt collection process shows how seriously many have been affected.

Among the bad news was the fact that the total fall in the British GDP was far worse than seen in other G7 nations. In fact, it was nearly twice as bad as the damage done to other leading economies around the planet.

As for public sector borrowing, in the last month is was noted as being around £31.6 billion. Compared to the same month last year, this was an increase of £26 billion. This is the highest amount ever borrowed in November of any year, and the third-biggest amount since records began in 1993.

Some estimates suggest the public sector borrowing in the UK could be at its highest level since World War Two by the time the first quarter of 2021 comes to a close, as the chancellor continues offering financial help to those who have been most affected by the current crisis.