UK Suffers Largest Slump in a Developed Economy Following Covid-19 Pandemic

Britain's economy entered recession in the second quarter for the first time since 2009 after a record 20.4% drop in GDP

The economy of the United Kingdom , the second largest 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 2.2%, thus confirming its entry into recession for the first time since 2009, according to data published by the National Statistics Office .

Specifically, activity in the service sector fell 19.9% in the second quarter, while in agriculture it fell 4.8%, in addition to a 20.2% drop in manufacturing and 35% in construction .

In this way, the collapse of the British economy is the largest among developed economies as a result of the pandemic , surpassing the 18.5% drop in Spain's GDP, as well as the 13.8% decline in France and 12 , 4% in Italy , doubling the 10.1% drop in Germany's GDP. In the same period, the euro area registered a contraction of 12.1% and the United States of 9.5%.

“The recession due to the coronavirus pandemic has caused the largest drop recorded in quarterly GDP,” acknowledged Jonathan Athow , a statistician at ONS, who highlights that the economy began to recover in June with the reopening of stores, increased production factories and the recovery of housing construction.

“Despite this, GDP in June is still one sixth below its level in February, before the virus struck,” 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, after a record fall of the 20% in April.

Thus, in the two months since the lows of last April, the British economy would have registered an expansion of 11.3%, although activity would still remain 17.2% below the levels observed in February 2020 .

The biggest drop in employment

On the other hand, the coronavirus crisis caused the loss of 220,000 jobs in the United Kingdom in the second quarter of the year, which represents the largest drop in the number of employed persons since the three months between May and July 2009, according to the ONS , while the unemployment rate remained at 3.9%, largely thanks to the effect of the work suspension measures implemented by the Government.

According to the ONS, between April and 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.

On its side, the occupancy rate in the United Kingdom 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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