Kate Andrews Kate Andrews

Is Britain heading for the worst economic hit in Europe?

It’s odd to read headlines today saying that the UK has officially entered recession. We’ve known this for months: shops were closed, restaurants shuttered. You couldn’t get a cup of coffee or a haircut, offices were closed and millions furloughed. These were not normal times – but we knew that then, as we know it now. What we didn’t know was how far the economy had contracted, and how much this could be remedied by ending lockdown. The big news today, revealed by official figures released by the Office for National Statistics this morning, starts to answer this.

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It turns out that our economic hit was one of the hardest in Europe. UK GDP fell 20.4 per cent in the second quarter of the year (ie, April, May and June), its largest quarterly slump, and worst recession, on record. No part of the economy was spared but the services sector fared particularly badly, falling by 20 per cent, with the worst hit to accommodation and food services. To the surprise of no one, putting the nation under strict lockdown sent the economy into a free fall.

But while the whole of Q2 adds up to a 20.4 per cent contraction, the fall only came in the month of April. According to ONS figures, the economy has started its comeback: a revised 2.4 per cent growth in May (up from 1.8% on initial estimates) and nearly 9 per cent growth in June.

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That growth levels in June were far more buoyant than May’s figures signals that reopening non-essential shops made a significant difference to economic activity, and the further reopening of pubs, restaurants, hairdressers and other retail outlets in July could result in an even bigger boom in next month’s figures. As of the end of June, the UK economy is around 17% smaller than pre-crisis levels – this is better than April, when it was 25% smaller.

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