The UK is in recession for first time in 11 years, after coronavirus lockdown measures led to a huge drop in economic activity.
The Office for National Statistics (ONS) said on Wednesday that gross domestic product (GDP) slumped by a record 20.4% in the second quarter of 2020 following a fall of 2.2% in the first three months of the year.
It comes after shops, pubs, restaurants, hotels and other businesses were ordered to close their doors on 23 March to help stop the spread of Covid-19.
The dramatic decrease in GDP is around twice the size of declines in Germany and the United States and leaves the UK second only to Spain in terms of the economic impact of coronavirus in advanced economies.
April was the biggest drag on the quarter. The first full month of restrictions on “non-essential” businesses saw a record fall of 20.0% in monthly GDP and was followed by growth of 2.4% in May and 8.7% in June as restrictions were relaxed. However, the economy is still 17.2% smaller than it was in February 2020 and the UK is now in the largest recession on record.
What’s more, while the worst may be over in terms of economic growth, Chancellor Rishi Sunak has warned that the economic slump will lead to more job losses in the coming months.
The Bank of England expects the unemployment rate, which currently stands at 3.9%, to climb as high as 7.5% by the end of the year as the furlough scheme is wound down.