The economy of the United Kingdom shrank by a record 20.4% between April and June when the coronavirus lockdown was tightest, the largest contraction reported by any major economy so far, with a wave of job losses set to hit later in 2020.
Official figures published on Wednesday 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 when output grew by 8.7% from May, the Office for National Statistics said, just above economists’ average expectation in a Reuters poll for an 8% rise.
Some analysts, however, said this likely reflected a catch-up in activity suppressed during lockdown. The scale of the hit to gross domestic product may revive questions about Prime Minister Boris Johnson’s handling of the COVID-19 pandemic.
The United Kingdom has suffered Europe’s highest death toll, with more than 50,000 deaths linked to the disease between 1 March and 30 June, sources said.
“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’ average forecast 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.
Suren Thiru, an economist with the British Chambers of Commerce, said the pick-up towards the end of the quarter probably only reflected the release of pent-up demand rather than the start of a sustained revival.
“The prospect of a swift ‘V-shaped’ recovery remains remote as the recent gains in output may fade over the coming months as the economic damage caused by the pandemic increasingly weighs on activity, particularly as the government support measures wind down,” he said.
When the United Kingdom locked down
The United Kingdom GDP shrank by 2.2% in the first quarter of the year, reflecting the lockdown that started on March 24. The United Kingdom went into lockdown in late March, after other European countries, meaning more of the hit was reported in the second quarter than in the first three months of the year when Britain’s economy shrank by less than the euro zone’s.