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Recession hits UK for first time in 11 years after economy shrinks by record 20% ‘Hard times are here’: UK suffers WORST economic meltdown in Europe with over 20% GDP contraction
(about 2 hours later)
The UK is officially in a recession after newly released figures show that the nation suffered the largest economic contraction on record. The slump has been blamed on the government’s coronavirus lockdown restrictions. The UK officially entered recession after its economy contracted more than any major European country during Covid-19 lockdown. Its GDP plummeted 20.4 percent in the second quarter, the biggest drop since records began in 1955.
The country’s gross domestic product (GDP) fell by 20.4 percent between April and June, marking the second consecutive quarterly decline, the Office for National Statistics (ONS) revealed on Wednesday. The plunge puts the United Kingdom into recession for the first time since 2009 and follows a 2.2 percent drop in GDP in January-March. The figures show that the damage was widespread, with the construction industry alone seeing a 35 percent contraction. Services, the biggest part of the economy, nosedived 20 percent, and industrial production shrank 17 percent. Construction led June’s rebound, while services increased a more modest 7.7 percent.
The UK’s quarterly GDP plunge is the largest in Europe and also outstripped the economic downturn in the United States. According to the data, government spending dropped 14 percent, while business investment plunged 31.4 percent. Consumer spending declined 23.1 percent. The hospitality industry saw the biggest drop in productivity, tumbling 75 percent. Wages and salaries fell 1.6 percent, the first decline since 2015 and the largest since 2008.
The ONS said that the drop in GDP represents the largest quarterly losses in the UK economy since it began keeping records of the metric in 1955. The massive contraction “reflects the ongoing public health restrictions and forms of voluntary social distancing that have been put in place in response to the coronavirus (Covid-19) pandemic,” the ONS stated. “The long duration of the lockdown in the second quarter, due to the government’s slow response to Covid-19 in March, followed by its failure to prevent the virus from spreading from hospitals, was at the root of the economy’s underperformance,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, wrote in a report, cited by Bloomberg.
The grim economic data comes a day after the UK posted the largest quarterly drop in employment in more than a decade.  The Bank of England said the labor market was a key concern, while officials fear a jump in unemployment when government job support is withdrawn later this year. The number of employees on payrolls is already down around 730,000 compared with March.
Like this story? Share it with a friend! “I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here,” said Chancellor of the Exchequer Rishi Sunak. “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”
Billions of pounds have been injected into the country’s financial system through bond purchases and lending programs. The central bank has also cut its key interest rate to near zero, having warned that the longer the recovery takes, the greater the risk of economic “scarring.”
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