LONDON | The United Kingdom, hit by the coronavirus crisis, suffered in the second quarter a “record” drop of 20.4% of its economy and, in the first six months of the year, its worst recession on record.
According to the National Statistics Office which publishes these figures on Wednesday, this is the first technical recession – namely two consecutive quarters of contraction in gross domestic product (GDP) – since 2009 and the financial crisis.
According to the ONS, most of the contraction, which began to be felt in March, came in April, an entire month of containment during which production collapsed by 20%.
With a very early recovery in construction sites and manufacturing activity, gross domestic product (GDP) rebounded in May by 2.4% (revised figure), followed by an acceleration in June (+8.7 %) thanks in particular to the reopening of all shops, specifies the ONS.
The sharpest contraction in the UK economy since the ONS began these quarterly statistics in 1955 reflects “restrictions” on travel and activity that have taken place since lockdown in the country took effect, on March 23, and their duration longer than in most developed countries.
“I have said before that difficult times await us, today’s figures confirm it. Hundreds of thousands of people have already lost their jobs, and unfortunately, in the coming months, many more will do the same, ”commented Finance Minister Rishi Sunak.
The United Kingdom posted the worst performance in the second quarter in Europe, ahead of Spain (-18.5%) and much worse than France (-13.8%).
Over the two quarters of recession, the statistics body notes that the British economy contracted by 22.1%, “a little less than the 22.7% observed in Spain, but more than double the fall of GDP of 10.6% in the United States ”over the same period.
“The UK’s performance is worse than its peers to an extraordinary degree,” Pantheon Macro analysts note.
This underperformance of the country which also has the most deaths in Europe due to COVID-19 can also be attributed to its heavy dependence on services, especially consumer spending which plunged during containment, “and to a great extent activity of parents, many of whom had to leave their jobs to take care of their children, ”continues Pantheon Macro.
According to this research firm, these “structural disadvantages” should continue to slow the recovery in the third and fourth quarters.
The shock of the pandemic and the forced immobilization of activity has barely been cushioned by the unprecedented measures and the tens of billions of pounds injected by the government via loans or aid to maintain the economy. employment, or by the Bank of England with asset repurchases as well as an interest rate at the historic low and almost zero.
The recession is already causing very heavy social damage, with a drop of 730,000 in the number of people employed between March and July, according to official figures released Monday.
Almost not a day goes by without an announcement of job cuts by the thousands for companies that are worried about the end scheduled in October of the partial unemployment scheme.
The unemployment rate is expected to soar, as will precariousness, with millions of Britons dependent on social minima.
For 2020 as a whole, the Bank of England expects a 9.5% drop in GDP, but at the same time expects a slower recovery in 2021 and the economy to return to its normal level. before the pandemic until 2022.