UK in historic recession
Chancellor Rishi Sunak said that the ONS figures "confirm that hard times are here"
BRITAIN has collapsed into its largest recession on record after the coronavirus lockdown sparked a 20.4% contraction between April and June in the biggest slump of any major global economy.
The UK's nosedive into recession - as defined by two quarters in a row of falling output - marks the first since the 2008 financial crisis, with the eye-watering second-quarter plunge following a 2.2% fall in the previous three months.
The official figures confirm the UK was the hardest hit of all the major developed economies in the second quarter, even beating Spain's 18.5% decline and double the contraction seen in the United States.
But monthly data showed a recovery from the nadir of the recession in April gathered pace, with the economy bouncing back by a better-than-expected 8.7% in June as lockdown restrictions eased.
This followed upwardly revised growth of 2.4% in May.
The Office for National Statistics (ONS) said the economy is still a long way off from recovering the record falls seen in March and April.
Chancellor Rishi Sunak said that the ONS figures "confirm that hard times are here".
He said: "Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will."
But he told broadcasters there were some "promising signs" for the economy after the June growth figures.
The grim figures come after ONS data on Tuesday showed around 730,000 jobs have been lost since the lockdown began in March, while employment also dropped by the largest quarterly amount for 11 years between May and June.
The ONS said the UK economy is now 22.1% smaller than it was at the end of 2019 and 17.2% below levels seen in February, despite two months of growth since April when the UK was in full lockdown.
Jonathan Athow, deputy national statistician at the ONS, said: "The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover.
"Despite this, GDP in June still remains a sixth below its level in February, before the virus struck."
Experts said that hopes of a swift V-shaped recovery look dashed, while there are fears of an economic relapse amid the threat of a second wave of coronavirus and with a jobs crisis also on the horizon as government support measures come to an end.
The Bank of England also warned last week the UK could take longer to rebound than previously predicted, forecasting the economy would not jump back to pre-virus levels until the end of 2021.
The ONS's initial secondquarter estimate shows the economy was hit across the board as the lockdown wrought havoc, with the services sector which accounts for over threequarters of UK output - dropping 19.9%, the construction sector falling 35% and manufacturing down 20.2%.
Samuel Tombs, at Pantheon Macroeconomics, said "the UK economy has underperformed its peers to an extraordinary degree", though much of this is down to the economy's reliance on the hard-hit services sector.
He cautioned the rebound will "peter out in the autumn" with further lockdowns likely.
HOW WAS IT SPARKED AND WHAT WILL IT MEAN?
The coronavirus crisis has seen the UK plunge into recession for the first time since the 2008 financial crisis.
Countries worldwide have been hit by the pandemic, but Britain suffered the biggest second-quarter contraction of all the major economies.
Here we look at some of the key questions surrounding the economy's record-breaking recession and what it means for Britons.
Why is the UK in recession and what does it mean?
The Office for National Statistics (ONS) officially declared the UK in recession - the steepest on record - after the economy plunged by a record 20.4% between April and June due to the coronavirus lockdown.
This follows a 2.2% contraction in the previous three months and means the UK entered into a technical recession, as defined by two successive quarters of falling output.
It marks the first time since the 2008 global financial crisis, when the UK fell into a yearlong recession.
Why has the UK economy been the hardest hit among the major global economies?
Britain's second quarter contraction was the steepest of all the major economies, worse even than Spain's 18.5% tumble and more than double the 9.5% plunge seen in the United States.
Experts say some of this is down to the later timing of Britain's lockdown in March and the path of easing restrictions.
But the hit is also down to the make-up of Britain's economy, which relies on the services sector for more than three-quarters of its output.
The services sector - spanning retail and hospitality to banks and real estate - has been knocked particularly badly by the lockdown, with restrictions easing only slowly for many and some activities still not fully open.
What does the June rebound in the economy mean?
Monthly data showed gross domestic product (GDP) grew by a better-than-expected 8.7% in June, following expansion of 2.4% in May, as lockdown restrictions eased further.
With non-essential shops having reopened for business in June, it meant the powerhouse services sector notched up growth of 7.7%.
Restaurants, hotels and pubs have also since reopened, which is expected to lead to an even bigger bounce-back in July and August.
Experts believe the third quarter overall will see steep growth, meaning the UK will see a swift exit from recession.
Does that mean the UK economy is already out of the woods?
Unfortunately not. Despite growth over the past two months, the economy is still 22.1% smaller than it was at the end of 2019.
And there are fears the UK faces a long road ahead to economic recovery, given the threat of a second wave and possible further lockdowns, with a jobs crisis also on the horizon as Government support measures come to an end.
What does it mean for Britons?
Recessions ultimately have an impact on living standards, but the full effect will largely depend on the scale of unemployment and how long it takes for businesses and the jobs market to recover.