GDP stats reveal depths of UK’s virus-fueled first recession since 2008
By Reuters – AFP Source: Reuters - AFP Published: 2020/8/12 18:38:40
Britain's economy shrank by a record 20.4 percent between April and June, when the coronavirus lockdown was tightest, the largest contraction reported by any major economy so far, official figures showed on Wednesday.
There were signs of a recovery in the month of June alone when gross domestic product grew by 8.7 percent from May, the Office for National Statistics said.
That was just above economists' average expectation in a Reuters poll for an 8 percent rise.
"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."
The grim economic news comes despite unprecedented government interventions, including spending tens of billions of pounds on job support schemes in a bid to avoid mass layoffs.
Meanwhile the Bank of England (BoE) has launched massive asset buybacks and cut interest rates to historic lows that are almost zero.
The country, which already has the highest death toll in Europe from the virus, appears to be paying a heavier price for locking down later than its continental neighbors earlier in 2020.
The British economy also relies more heavily on the hard-hit services sector than other European nations.
The recession is already wreaking havoc, with ONS data released Monday showing around 730,000 UK workers have been removed from the payrolls of British companies since March.
Announcements of job cuts have become a daily occurrence, with firms expected to pick up the pace of layoffs as the government's key employment support scheme ends in October.
The unemployment rate is expected to soar in the months ahead, with millions set to turn to government benefit programs.
The BoE expects the unemployment rate to shoot higher to around 7.5 percent by the end of 2020 from 3.9 percent currently. The central bank forecasts that the UK economy will have contracted by 9.5 percent for the whole of 2020.
Newspaper headline: Britain economic output collapses by 20.4%
There were signs of a recovery in the month of June alone when gross domestic product grew by 8.7 percent from May, the Office for National Statistics said.
That was just above economists' average expectation in a Reuters poll for an 8 percent rise.
"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."
The grim economic news comes despite unprecedented government interventions, including spending tens of billions of pounds on job support schemes in a bid to avoid mass layoffs.
Meanwhile the Bank of England (BoE) has launched massive asset buybacks and cut interest rates to historic lows that are almost zero.
The country, which already has the highest death toll in Europe from the virus, appears to be paying a heavier price for locking down later than its continental neighbors earlier in 2020.
The British economy also relies more heavily on the hard-hit services sector than other European nations.
The recession is already wreaking havoc, with ONS data released Monday showing around 730,000 UK workers have been removed from the payrolls of British companies since March.
Announcements of job cuts have become a daily occurrence, with firms expected to pick up the pace of layoffs as the government's key employment support scheme ends in October.
The unemployment rate is expected to soar in the months ahead, with millions set to turn to government benefit programs.
The BoE expects the unemployment rate to shoot higher to around 7.5 percent by the end of 2020 from 3.9 percent currently. The central bank forecasts that the UK economy will have contracted by 9.5 percent for the whole of 2020.
Newspaper headline: Britain economic output collapses by 20.4%
Posted in: EUROPE,WORLD FOCUS