Britain is hit by its worst ever recession in second quarter
THE UK economy shrank by more than a fifth in the second quarter of this year as a result of the pandemic, posting by far the worst performance of any major country.
The Office of National Statistics (ONS) said yesterday that UK output shrank by 20.4pc in the second quarter from the first — much deeper than the 12.1pc in the eurozone - and economists warned its recovery next year would be slow thanks to Brexit, even as Chancellor of the Exchequer Rishi Sunak said there were some “promising signs”.
The Chancellor hailed growth of 8.7pc in June, although Mr Sunak told broadcasters there was too much uncertainty to know whether the country would have a swift, V-shaped recovery.
“What we do know is that there are promising signs,” he said. “There’s still work to do and even as we recover many people are going to lose their jobs, already have lost their jobs, and we need to make sure that we are constantly focused on providing new opportunities for those people.”
The large contraction of the UK economy primarily reflected how lockdown measures have been in place for a larger part of this period in the UK, the ONS said.
While two the two consecutive quarters of declining gross domestic product mean the UK as a whole was in recession, the situation in Northern Ireland had deteriorated even before coronavirus hit, Ulster Bank economist Richard Ramsey said.
“Quarter four was the start of our recession, and while we could be back to growth at this point, job losses are still going to be with us and we’ll still be seeing employment falling by the end of next year,” Mr Ramsey said.
The North will still be living with high unemployment, even when economic output starts to grow again, he said.
“So while a recession may officially be over, in a technical sense - from any kind of meaningful perspective in terms of difficulties in the labour market, and an income squeeze on households, recession is going to be with us for some time.”
He said a trend for rising unemployment and job losses in Northern Ireland was likely to continue until 2022.
In London the Chancellor reiterated his opposition to extending the government’s huge job retention scheme which is due to expire at the end of October.
Mr Sunak also said he expected to see more people returning to their workplace in the coming weeks after the government recently changed its guidance.
The Bank of England recently forecast it would take until the final quarter of 2021 for the economy to regain its previous size, and warned that unemployment was likely to rise sharply.
As well as taking the biggest economic hit from Covid19, Britain has recorded the highest death toll in Europe at more than 50,000 people.