Office for National Statistics (ONS) has revealed that Coronavirus lockdown measures have pushed the UK economy into recession. These measures were introduced as a result of the coronavirus (COVID-19) pandemic.
The economy shrank by 20.4% in the second quarter of 2020. Construction and factory output slowed as the lockdown took effect and household spending decreased as a result of the closure of shops.
Additionally, the UK services sector experienced the largest quarterly decline since records began, according to the ONS.
This means the country is officially in recession – defined as two consecutive negative quarters – for the first time since the credit crunch. The economy dipped 2.2 per cent in the first three months of the year and is now smaller than it has been since 2003.
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How did the coronavirus measures put the UK economy in recession?
Commenting on data,Tej Parikh, Chief Economist at the Institute of Directors (IoD), said:
“These dire figures highlight the painful reality households and businesses across the country are facing. The battle now is to prevent longer-term scarring from this coronavirus-induced plunge in economic activity.”
“Job losses have been mounting and may only increase as we reach the end of the furlough scheme. The pile of debt businesses have had to take on could also cause a lasting hangover. With flimsy balance sheets, directors will find it difficult to push ahead with any spending plans. Meanwhile, sales and operations will remain limited by the need for social distancing and ongoing uncertainty around the virus.”
The IoD has urged the government to respond with measures to support jobs, such as reducing employers’ national insurance contributions (NICs).
Household spending plunged as the government had ordered to close the shops. Whereas, factory and construction output also fell.
This pushed the UK into its first technical recession – defined as two consecutive quarters of economic decline – since 2009.
Chancellor Rishi Sunak told the BBC that the government was “grappling with something that is unprecedented” and that it was “a very difficult and uncertain time”.
But shadow chancellor Anneliese Dodds blamed Prime Minister Boris Johnson for the scale of the economic decline. He said: “A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t.”
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