Highlights:
- UK’s GDP sees a record collapse of almost 20%
- The historic GDP drop was seen in the 2nd quarter due to COVID-19
- In recent months, the output has picked up pace
The United Kingdom has suffered a record collapse in its economic output in the second quarter of 2020 due to the lockdown measures put in action to contain the spread of the novel Coronavirus, having said this, the decline was still smaller than what was initially estimated.
The country’s Gross Domestic Product (GDP) contracted by 19.8% in the three month until June, according to the Office for National Statistics (ONS), which is still slightly better considering it was estimated to crash by 20.4%.
However, it is still more than for any other major developed economy.
The contraction in GDP was the biggest since ONS started recording it back in 1955. Other data have suggested that Britain is on course for its biggest annual fall since the 1920s.
The country’s economy had already shrunk by 2.5% in the quarter of January to March even though the country only entered the lockdown stage in late March.
The good news for the country is that the output has rebounded in the recent months, however, the recovery still looks to be fading as the cases of novel COVID-19 are rising and forecasts of a jump in unemployment as the government scales back job support.
Ruth Gregory of economic research consultancy Capital Economics had said, “The renewed COVID-19 restrictions will probably mean that GDP stagnates in Q4, leaving economic activity marooned 5.5% short of its pre-crisis level,”.
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She added, “And the risk now is that renewed containment measures send the recovery into reverse,”.
Households in the UK saved a record 29.1% of their income, up from 9.6% in the first quarter. The major reason is being said to be their inability to spend in many shops and restaurants during the lockdown, while incomes were supported by a government job programme which ends next month.
The UK has suffered the highest death toll caused by COVID-19 in the European continent with over 42,000 casualties.
“Compared with a year earlier, Britain’s second quarter output tumbled 21.5% – the same as in Spain – while France reported a 19.0% drop,” a report said.
The statistics office said that the differences in how the countries estimate public sector activity – especially if the country focused on money spent or used the ONS’ approach of looking at the extent of disruption to normal services – complicated the international comparisons.
Having said this, it is being said that the UK’s economy contracted more than any other of the Group of Seven economies in the first half of 2020.
Coming to the period of July and August, the retail spending has exceeded the pre-pandemic figures – driven by a boom in online purchase, groceries, and home improvements – and the figures, on 30th September 2020, showed the highest annual rise in house prices in over 4 years in the UK.
