UK economy crashes into deep recession
The UK economy has crashed into deep recession as a result of Covid/Lockdown restrictions. However, recovery may also have begun.
What are the numbers?
Between April and June, the economy shrank by just over 20%. This is the biggest fall since the ONS starting recording this data in 1955.
Since the start of the year, the economy has lost all the economic growth achieved in the last 17 years (2003).
However we look at, or the reasons behind it, the UK economy is in a deep recession.
Is there any good news?
Despite the overall fall, the economy actually grew for the month of June, by about 8%. So although our economy has crashed sharply over the year so far, it is possible that businesses are starting to recover as we speak.
What does this all mean?
According to the ONS;
“This the largest quarterly contraction in the UK economy since Office for National Statistics (ONS) quarterly records began in 1955, and 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.”
This chart shows the recent drop in GDP compared to previous periods going back to 2005. Blue colour is economic growth, and red is the economy shrinking.
How does this compare with similar countries?
So, UK economic growth has fallen and the UK is in recession. How does the UK compare for the most recent quarter from April to June?;
- UK -20.4%
- Euro Area average -12.1%
- France -13.8%
- Italy -12.4%
- Germany -10.1%
- USA -9.5%
We can see the UK economy has suffered a much larger decline between April to June than other similar countries.
Want to learn more?
You can read the ONS press release here.
Find out about NewsBrokerUK here.
See the USA GDP details here. Note the US publishes GDP at an annualised rate. We have quoted the quarterly rate to make sure the number is a comparison with other countries.
Some numbers rounded, full details in press release.
ONS are the official statistics provider for the UK.
GDP means Gross Domestic Product and is the name economists use to value how much a country makes and sells.