Record recession as GDP plunges 20pc

Economy fell more than 20pc in lockdown, official figures show, making UK the worst performing in G7

The UK plunged into the deepest recession on record yesterday, as Rishi Sunak, the Chancellor, warned of “hard times” ahead and said the country faced “difficult choices”. Lockdown caused the economy to contract 20.4 per cent in the second quarter, making the UK the worstperforming economy in the G7, Office for National Statistics figures showed. Mr Sunak said many more jobs would be lost, on top of the 730,000 jobs that have disappeared since March.

THE “hard times” are here, Rishi Sunak said yesterday as the UK plunged into the deepest recession on record.

The lockdown prompted a 20.4 per cent economic decline in the second quarter, making the UK the worst-performing economy in the G7, Office for National Statistics (ONS) figures showed.

The Chancellor said the figures “confirm that hard times are here. Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”

Mr Sunak added: “But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity.”

He said the UK was more affected by the lockdown than other equivalent countries because a larger share of its economy relied on “social activities”.

Boris Johnson last night said the UK must “commit to building back stronger than ever”.

The Prime Minister was speaking ahead of a visit to Northern Ireland today, where he was due to meet Arlene Foster, the First Minister, and discuss ways to rebuild the economy.

Yesterday’s figures confirmed the UK was the hardest hit of all the major developed economies over the past three months. By contrast, Spain’s economy contracted by 18.5 per cent.

It confirmed the UK was in a recession, which is defined by output falling for two consecutive quarters, for the first time since the financial crisis.

The figures came a day after ONS data showed around 730,000 jobs had been lost since March.

Jonathan Athow, the ONS deputy national statistician, said: “The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, GDP in June still remains a sixth below its level in February.”

Meanwhile, pressure mounted on Mr Sunak to extend the furlough scheme beyond October in a targeted way. Hospitality, car manufacturing, and the arts suffered significantly worse blows than other sectors.

Anneliese Dodds, the shadow chancellor, said the economic figures represent a “double tragedy” combined with the death count from Covid-19, and called for the furlough scheme to be extended for the worst-hit sectors.

Ms Dodds also called for employers to be temporarily given the legal right to cut workers’ hours in lieu of redundancy. It follows a German programme called Kurzarbeit, introduced after the financial crisis, where the state tops up wages for those whose hours are cut.

Writing in The Daily Telegraph, Ms Dodds says: “German employers can reduce workers’ hours when times are tough instead of making them redundant – exactly the sort of innovative solution that could save many jobs here in the UK.”

However, Mr Sunak, who has ruled out extending wage support, yesterday said providing “fresh opportunity” was more important than saving old jobs.

Any expectation of belt-tightening measures in the Autumn are increasingly being shelved, as the UK is set to see the worst of the unemployment slump over the next few months. Mr Sunak is expected to bring a slimmed down Budget focused on rescue measures to drive the recovery, and save any tax rises or spending cuts until later.

It came as “red wall” Tory MPS said investment in the North had “never been more important”. A group of seven northern MPS urged Mr Sunak to introduce £1,000 grants for Northerners who wish to retrain as well as tax credits for businesses in clean energy, technology and aerospace sectors.

Research from the Northern Policy Foundation found the North East was predicted to see the UK’S highest unemployment rate for the second quarter of 2020, at 5.2 per cent, compared to 3.3 per cent in the South East.