Posted: Wed 12th Aug 2020

UK officially falls into recession with biggest fall in quarterly GDP on record

News and Info from Deeside, Flintshire, North Wales
This article is old - Published: Wednesday, Aug 12th, 2020

The UK has officially fallen into recession for the first time in 11 years due to the impact of the coronavirus pandemic.

Gross domestic product (GDP) fell by 20.4% in the three months to June 2020, following a fall of 18.7% in the three months to May, as government restrictions on movement dramatically reduced economic activity.

GDP did however grow by 8.7% in June 2020, following growth of 2.4% in May 2020 but the level of output didn’t fully recover from the record falls seen across March and April 2020.

A recession is defined as two successive quarters of decline in gross domestic product (GDP), which has not been seen in the UK since the financial crisis back in 2008.

Gross domestic product or GDP is a measure of the size and health of the economy from one quarter to then next.

Household spending forms the biggest part, accounting for about two thirds of GDP.

The upshot is that less output means businesses and people are making, buying and selling less which means less work and less pay. 

Welsh Government Minister Julie James said the figures are “not a surprise, we knew that the lockdown would cause a really big effect on our economy.

These figures are not broken down, other than for the UK so we haven’t got any specific data for Wales yet.”

She said there was a “fairly small glimmer of hope in Wales as it does seem that our employment figures are holding, and we do think that’s because we’ve managed to get the most generous package of support out to our businesses in Wales.”

Speaking on BBC Radio Wales this morning, the minister for housing and local government said: “We’re in for very hard times, going into the autumn it seems to us and so we’re working very hard to shore up those parts of the economy that most need it.”

“And obviously calling on the UK government to do something about the tapering of the furlough specifically to support for example the hospitality businesses who have not yet been able to get back to full opening and are unlikely to be able to do so given the state of the virus across the UK.”

Commenting on today’s GDP and productivity figures for June and the second quarter, ONS Deputy National Statistical for Economic Statistics Jonathan Athow said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

“Overall, productivity saw its largest fall in the second quarter since the three-day week. Hospitality was worst hit, with productivity in that industry falling by three quarters in recent months.”

“It is clear that the UK is in the largest recession on record. Our latest estimates show that the UK economy is now 17.2% smaller than it was in February, the effects of which have been most pronounced in those industries that are most exposed to public health restrictions and the effects of social distancing.”

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