Breaking: UK enters recession for the first time in 11 years
The coronavirus pandemic has taken a significant hit on the economy of Britain as the United Kingdom has reportedly fallen into recession for the first time in 11 years.
Britain officially plunged into a recession with a data set showing a collapse of about 20 per cent of gross domestic product in the second quarter. This is the worst contraction in Europe.
The Office of National Statistics is uniformly expected to confirm the unprecedented contraction between April and June. The predicted drop in output depicts the high fall in economic activities within the nation during the quarter as a result of the lockdown.
This is Britain's first recession since 2008. Economists polled by Bloomberg have predicted an average decline of 20.7 per cent in the second quarter, compared to the first three months of the year.
The UK economy contracted by 2.2 per cent in the first quarter. Since a recession is defined as two successive quarters of decline, the data on Wednesday heralds the country's first recession in a decade.
The gloomy economic report comes despite the various government interventions, including billions of pounds launched into job support schemes in a bid to avoid mass layoffs.
The government had earlier launched the 'Eat Out to Help Out' scheme aimed at supporting the hospitality industry. Clacified Intl reported earlier that this scheme has been used to pay for almost 11 million meals in its first week, according to the Treasury.
Meanwhile, the Bank of England launched massive asset buybacks and cut interest rates to historic lows that are almost zero.
If Britain's GDP drops by more than 20%, it will have posted the worst performance in Europe in the second quarter, ahead of Spain (-18.5 per cent) and France (-13.8 per cent).
The United Kingdom already has the highest death toll in Europe from the COVID-19 and seems to be more intensely hit by the lockdown which it imposed later than other nations in the continent.
The recession is already wreaking havoc even as ONS data released on Monday showed that about 730,000 workers had been removed from the payrolls of British companies since the pandemic outbreak in March.
The unemployment rate is still expected to soar in the forthcoming months with millions set to resort to government benefit programmes.
Micheal Hewson, an analyst at CMC Markets, said, "Whatever the numbers are, and they won't be pretty, the more important question is how quickly the UK economy can bounce back. We have seen some progress on that".
The Finance Minister, Rishi Sunak is still cautious about the pace of recovery and told Sky News last week, "There is hardship ahead for many people". He, however, noted that there was "hope".
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