UK officially in recession after record drop in GDP
The UK economy declined by more than 20% in the second quarter of 2020 as the lockdown pushed the country into recession for the first time in 11 years.
It is the biggest drop ever recorded, confirming the scale of the economic challenge that the country now faces.
The economy had shrunk by 2.2% in the first quarter, affected by the global pandemic and the start of the lockdown. A recession is defined as two consecutive quarters of falling gross domestic product (GDP).
The monthly GDP figures offer a note of optimism as in June GDP increased 8.7%, which was ahead of forecasts. However the huge number of job cuts already announced across a range of sectors, even before the furlough scheme ends in October, points to a difficult and uncertain recovery ahead.
“This confirms the economic pummelling from the essential public health measures put in place to contain Covid-19,” said Alpesh Paleja, lead economist at the CBI.
“Encouragingly, the economy grew in May and June, indicating that the early stages of a recovery are underway. Yet cashflow constraints are still biting hard for businesses, and with the pandemic not going away anytime soon, a sustained recovery is by no means assured.
“The dual threats of a second wave and slow progress over Brexit negotiations are also particularly concerning, underlining the need for maximum agility from Government on both these issues, allowing a greater focus on the economy’s long-term future.”