The United Kingdom, the second largest economy in Europe, suffered a historic slump in activity between April and June with a 20.4% drop in gross domestic product (GDP) compared to the previous three months, when it had registered a contraction of 2.2%, thus confirming its entry into recession for the first time since 2009, according to data published by the National Statistical Office.
Specifically, activity in the services sector fell by 19.9% in the second quarter, while agriculture fell 4.8%, in addition to a 20.2% drop in manufacturing and 35% drop in construction.
The collapse of the British economy is now the largest to date among developed economies as a result of the pandemic, overcoming the 18.5% drop in Spain’s GDP, as well as the 13.8% decline in France and 12.4% in Italy, and doubling the 10.1% drop in Germany’s GDP. In the same period, the aggregate Euro area registered a contraction of 12.1%, while the United States registered a contraction of 9.5%.
“The recession due to the coronavirus pandemic has caused the largest drop recorded in quarterly GDP“
“The recession due to the coronavirus pandemic has caused the largest drop recorded in quarterly GDP,” said Jonathan Athow, statistician from ONS, who highlights that the economy began to recover in June with the reopening of stores, the increase in the production of factories and the recovery of housing construction.
“Despite this, GDP in June still remains a sixth below its level in February, before the virus attacked,” he added. In this sense, according to the monthly data published by the ONS, the British GDP experienced a rebound of 8.7% in June as the lockdown eased, after having grown by 2.4% in May, following a record fall of the 20% in April.
In the two months since April’s lows, the British economy would have registered an expansion of 11.3%, although activity would still remain 17.2% below the anticipated levels of 2020.
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The Biggest Job Drop
Along with the GDP contraction, the coronavirus crisis caused the loss of 220,000 jobs in the United Kingdom in the second quarter of the year, this represents the largest drop in the number of employed persons since the three months ended July 2009, according to the ONS. The unemployment rate remained at 3.9%, largely due to the effect of the work suspension measures implemented by the Government.
In June the number of employed persons in the United Kingdom was 32.92 million, which represents an annual increase of 113,000 workers, but a drop of 220,000 employed persons compared to the first quarter of the year.
“The United Kingdom’s employment rate in the second quarter stood at 76.4%, three tenths above the level of a year earlier…“
On the other hand, the United Kingdom’s employment rate in the second quarter stood at 76.4%, three tenths above the level of a year earlier, but two tenths less than in the previous quarter.
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Borja Salvador
Borja Salvador
Sales Account Manager
bsalvador@tvmarkets.com
