Samuel Case, FISM News
Britain’s economy shrank by a record 20.4% in the second quarter when the coronavirus lockdown was tightest, the most severe contraction reported by any major economy so far, with a wave of job losses set to hit later in 2020.
The data confirmed that the world’s sixth-biggest economy had entered a recession, with the low point coming in April when output was more than 25% below its pre-pandemic level.
Growth restarted in May and quickened in June when the economy expanded by a monthly 8.7% – a record single-month increase and slightly stronger than forecasts by economists in a Reuters poll.
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.
Any decision to pump more stimulus into the economy by the BoE and finance minister Sunak will hinge on the pace of growth in the coming months, and whether the worst-hit sectors such as face-to-face retail and business travel ever fully recover.
The second-quarter GDP slump exceeded the 12.1% drop in the eurozone and the 9.5% fall in the United States.
Some economists said the sharper decline partly reflected the timing of Britain’s lockdown – which fell more in the second quarter – and its dependence on domestic consumer spending.
British GDP shrank by 2.2% in the first quarter of the year, reflecting the lockdown that started on March 24.
However, the Office for National Statistics said that over the first six months of 2020, British GDP fell by 22.1%, slightly less than Spain’s 22.7% but more than double the 10.6% fall in the United States.
“The larger contraction of the UK economy primarily reflects how lockdown measures have been in place for a larger part of this period in the UK,” it said.
Non-essential shops in England did not reopen until June 15, and pubs and restaurants were shut until July 4.
Employers have already shed more than 700,000 jobs since March, according to tax data.
Sourced from Reuters American Wire, edited for brevity