United Kingdom economy slips into recession

Cornelia Mascio
Agosto 15, 2020

"The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record", Jonathan Athow, Office for National Statistics said.

The United States officially entered a recession in June, after it posted back-to-back quarters showing a combined drop in GDP of 10.6 per cent.

"I've said before that hard times were ahead, and today's figures confirm that hard times are here", said Treasury chief Rishi Sunak.

But Britain's second-quarter contraction beat Spain's GDP of minus 18.5 per cent. Though it remained 17.2% below February levels, monthly GDP rose by 8.7% during June 2020.

The scale of the hit to gross domestic product may revive questions about Prime Minister Boris Johnson's handling of the COVID-19 pandemic.

It is Britain's first recession since the 2008 financial crisis. "Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will".

Shadow Chancellor Anneliese Dodds tweeted: "We've already got the worst excess death rate in Europe - now we're on course for the worst recession too".

Prime Minister Boris Johnson admitted the day before that the British economy will take months to recover from the crisis caused by Covid-19, which already leaves more than 46,600 deaths and nearly 313,000 positive cases due to the disease in the country.

However, Samuel Tombs, senior United Kingdom economist at Pantheon Macroeconomics, thinks the United Kingdom economy will likely "lag" others because of "structural disadvantages", notably the fact that the economy is so dependent on consumer-facing businesses, where clearly human interactions are more important than in manufacturing or construction.

"A sustained recovery is by no means assured", he stated. "With so much uncertainty around the path of the pandemic, [it is] hard to see a meaningful recovery anytime soon".

"The cracks evident in the latest batch of labour market data are likely to soon turn into a chasm", said Ruth Gregory, senior economist at Capital Economics. "The battle now is to prevent longer-term scarring from this coronavirus-induced plunge in economic activity".

Mounting job losses are expected as Britain winds down its job retention scheme which protects employees.

"The pile of debt businesses have had to take on could also cause a lasting hangover".

So far, the British government has kept a lid on the official unemployment numbers through its Job Retention Scheme, which has given hard-pressed firms the opportunity to retain workers rather than fire them.

"The Treasury should also explore options for restructuring business loans, while a targeted grant to help [small and medium-sized businesses] adjust to the new normal would bolster the government's aim of reopening the economy", he said.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE