One of the major economies in the world is now entering recession for the first time in 11 years. This is brought about by their worst dive in UK’s GDP for the months of April to June since records began in 1955. The English country saw a shrink of 20.4 percent for the second quarter of the year, per the announcement on Wednesday.
Hard hit by pandemic
The largest crash among any other major players in the global economy has seen a decline in economic output due to, none else, the coronavirus pandemic. Record shows a slump in sectors including services, production, and construction, per CNN, which is rooted from lockdowns and restrictions imposed by the government in order to slow the spread of the virus.
Technically, a recession means two consecutive decline in economies per quarter. Prior to this steep drop in economic output is a shrink of two percent for the first three months of 2020. Thus, a technical recession, per Office of National Statistics (ONS) in the UK. Most of the drop in the economy was concentrated in April, just as the COVID-19 was just emerging.
News about the slump came just a day after the country saw a huge dive in their employment for this quarter. For the months of Q2, about 220,000 layoffs were witnessed by the UK. But Forbes noted that more people would start looking for jobs again in October when the government’s furlough scheme has expired by then.
‘No one left without hope or opportunity’
Finance minister of the country, Rishi Sunak, gave a statement saying: “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.”
Way to recovery?
Nonetheless, June saw a rebound for the economy. Output for the UK started picking up as restrictions were eased. It even surpassed the expectations of the analysts, with GDP rising by 8.7 percent on a month-to-month measure. The Bank of England projects full recovery of late in 2021, which could see the same levels as last year. To counter the economic toll of the pandemic, the country’s central bank even kept interest rates to 0.1 percent.
However, an analyst from investment company eToro thought that recovery “will be long and possibly painful at times,” Adam Vetesse said. “It will take months and perhaps even years, rather than weeks, before the economic scars from this pandemic heal.”