Virus batters UK economy, GDP shrinks 5.8% in March
HARD TIMES Chancellor Rishi Sunak says UK is facing ‘significant recession’
LONDON:Chancellor of the Exchequer Rishi Sunak has warned that the UK is facing a significant recession after a report showed the economy shrank 5.8% in March.
The sharp decline is only a small part of the damage of the coronavirus lockdown, which was in place for all of April. The measures heaped misery on an already tepid economy, with the Bank of England foreseeing a staggering 25% contraction this quarter.
There was also a chilling warning that many more lives could be lost if Britain experiences a protracted L-shaped recession that increases poverty. The UK already has the second highest number of deaths from Covid-19 worldwide.
The GDP figures highlight the monumental task the government faces as it begins to take small steps towards easing the lockdown.
The UK lockdown was imposed on March 23, meaning only about a week of the first quarter was affected. That was still enough for a 2% contraction in the three months, the worst since the global financial crisis more than a decade ago.
In March, the services sector bore the brunt. Travel and tourism plunged 50%, while accommodation fell by 46% and air travel by 44%. Manufacturing and construction also contracted.
“The first quarter was that bad based on just a few days of the impact of the coronavirus in March, so yes, it is likely that the UK is facing a significant recession,” Sunak said in an interview with Sky News on Wednesday.