UK tips into deepest recession on record after 20% contraction
The UK economy suffered a bigger slump than any other major European economy in the second quarter, shrinking by a fifth and falling into its deepest recession on record.
Official data released on Wednesday showed that gross domestic product (GDP) fell 20.4 per cent quarter on quarter, with widespread contractions across all sectors.
The figures confirm that the pandemic has hit the UK harder than other developed economies. After the second-quarter contraction, the decline in UK gross domestic product since the end of 2019 is double that in the US and second only to Spain among European peers.
Analysts said the UK’s underperformance was partly due to the length of its lockdown, and partly because the consumer-facing services sector that was hardest hit by social distancing has a bigger weight in GDP, accounting for 80 per cent of the economy.
A recovery from the depths of lockdown gained momentum in June, with output growing 8.7 per cent month on month – faster than most economists had expected, although broadly in line with the Bank of England’s latest predictions.
This means GDP has grown 11.3 per cent since its April low, but remains 17.2 per cent beneath its level in February, before the coronavirus crisis hit.
The FTSE 100 stock index outperformed its European peers on Wednesday morning, rising 0.7 per cent, as investors homed in on signs of a rebound.
“The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record,” said Jonathan Athow, Office of National Statistics (ONS) deputy national statistician.
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