News World UK economic output collapses by record 20% in second quarter

UK economic output collapses by record 20% in second quarter

Britain’s economy shrank by a record 20.4% between April and June, when the coronavirus lock down was 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-biggest economy entered a recession as it shrank for a second quarter in a row.

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

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

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

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% drop in the euro zone and the 9.5% 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 level of output in June was 16.8% below its level a year earlier, compared with a 23.3% fall for May.

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

(Reuters)

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