UK GDP crashed record 20% in second quarter

The UK’s gross domestic product (GDP) plunged 20.4% in the second quarter of 2020 amid the coronavirus lockdown — the most severe contraction reported by any major economy.

The decline is the steepest since records began in 1955 and roughly double that of Germany and the US.

The contraction pushed the UK into its first recession since 2009.

UK finance minister Rishi Sunak said: “Today’s figures confirm that hard times are here.

“Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”

The UK’s Office for National Statistics (ONS) said British GDP fell 22.1% over the first six months of 2020 — more than double the 10.6% GDP fall in 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,” said the ONS.

Luke Bartholomew, Investment Strategist, Aberdeen Standard Investments, said: “The UK officially entering into recession and joining a large number of countries around the world is no surprise.

“The confirmation does though focus attention from here on the success or otherwise of the Government’s regional lockdown and test and trace strategies and the evolution of the labour market.

“We expect a significant increase in unemployment over the next six months.

“Overall the furlough scheme has been a success and the Government faces the difficult dilemma of when to end it.

“On the one hand, it cannot continuously subsidise jobs that might eventually have to go.

“On the other hand, there is not sufficient information regarding the progress of finding a vaccine to make a considered judgement.

“The risk is ending furlough too early will cause mass job losses further denting economic activity and it might turn out not to  be necessary if there is better news on the vaccine front.

“More generally macro policy needs to become more supportive.

“Further fiscal easing in Autumn is necessary along with additional QE measures from the Bank of England to ensure smooth gilt market functioning in the context of the large debt issuance that fiscal easing will require.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.