UK In Recession For First Time In 11 Years
The UK has officially fallen into recession for the first time in 11 years due to the impact of the current pandemic.
It’s the worst recession on record for the country, with the outbreak sending the economy plunging by 20.4% between April and June this year. The nosedive, following a 2.2% fall the previous three months, was confirmed by the Office for National Statistics (ONS) – the UK’s first recession since the 2008 financial crisis.
A recession is declared following two successive quarters of decline in gross domestic product (GDP) With household spending decreasing over the first half of the year – in addition to shops, factories and other businesses having to close – the country’s GDP has taken a severe hit.
However, there is some light to consider: the ONS noted that the economy bounced back in June with a rise of 8.7% following the government’s easing of restrictions, particularly benefiting the hospitality sector which suffered greatly during lockdown.
Jonathan Athow, deputy national statistician for economic statistics, told BBC News:
The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, gross domestic product (GDP) in June still remains a sixth below its level in February, before the virus struck.
Athow added: ‘The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record,’ explaining that ‘overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months.’
As per The Guardian, Chancellor of the Exchequer Rishi Sunak issued a stark warning that the UK faces ‘difficult choices’ in the fallout of this recession.
I’ve said before that hard times were ahead, and today’s 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. 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.
In response to the news, Labour shadow chancellor Anneliese Dodds tweeted: ‘We’ve already got the worst excess death rate in Europe –now we’re on course for the worst recession too. That’s a tragedy for our country and it’s happening on the PM’s watch. A downturn was inevitable after lockdown – Johnson’s jobs crisis wasn’t.’
The countrywide unemployment rate, currently at 3.9%, is also set to hit 7.5% by the end of 2020 as the government winds down the furlough scheme.
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