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The UK’s GDP Begins the Recovery from the Deepest Recession on Record

The latest figures from the Office for National Statistics (ONS) confirm that the UK is officially in the deepest recession since records began. The country’s GDP is starting to recover, but it is still a long way back to pre-Covid levels.

A Look at the Numbers

One of the most worrying parts of the latest figures is the fact that the UK’s economy shrunk more than any other major nation since the lockdown began in March, up to June. In the second quarter of 2020, GDP in Britain fell by 20.4% when compared to the first quarter of the year.

This is the largest quarterly decline that has been registered since records on this subject began, way back in 1955. A recession is defined as being two consecutive quarters of negative growth. Since the first quarter of 2020 had a decline of 2.2%, it is now confirmed that the UK is in recession.

In fact, this is the sharpest decline of any G7 nation in the three months to June. It is also a more dramatic drop than seen in any other EU nation. The overall quarterly decline in the Eurozone was 12.1%.

Britain’s huge economic hit was more than double the 10.6% decline seen in the US. Among the major countries still to publish their second quarter data are Japan and Canada, but neither is expected to show a bigger negative impact than the UK.

The Reaction

Chancellor Rishi Sunak has attempted to halt the slide with a series of measures that are designed to re-activate the economy. He has already pointed out that he expects to see a large number of job losses in the coming months, as the furlough scheme begins to wind down.

Sunak said that he has mentioned before that “hard times were ahead” and that the latest numbers prove that “hard times are here”. He went on to point out that there “are difficult choices to be made ahead” but that the country will get through it.

Shadow Chancellor Anneliese Dodds said that the economic slide is a tragedy for the British people, and that it is still too soon to wind down the furlough scheme. She pointed out that there is no explanation why the country’s economy is faring “so badly compared to other countries”.

More Details

The second quarter’s bad news came from a widespread decline across nearly all sectors. Output was down severely across production, construction and services. Household and business spending fell too, as many businesses relied on the debt collection process to make ends meet.

They pointed out that the pandemic and subsequent lockdown restrictions had effectively wiped out the previous 17 years economic growth, all in just two quarters. This puts us back at the level of GDP that the UK was at in June of 2003.

The numbers for June suggest that the economic recovery has begun to gather pace, with an 8.7% growth in GDP, when compared to May, being a little better than had been predicted. Added to May’s improvement, this means an 11.3% growth since the worst point in April, but still 17.2% below the February position.