UK plunges into ‘record’ recession with 20 per cent GDP drop

Chancellor Rishi Sunak has warned the country that “hard times are here” as the British economy officially entered the deepest recession recorded amid the coronavirus pandemic.

The economy shrank by an unprecedented 20.4 per cent between April and June this year, the second quarterly decline after a 2.2 per cent hit between January and March.

It plunges the UK into recession for the first time in 11 years, following months of the country being locked down to prevent the spread of COVID-19.

But the Office for National Statistics, which published the data on Wednesday, said there were signs of a recovery in June's data as coronavirus restrictions began to be eased.

Bracing the country for more grim news, Sunak said: “I’ve said before that hard times were ahead, and 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.”

Jonathan Athow of the ONS said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover.

"Despite this, GDP in June still remains a sixth below its level in February, before the virus struck."

He added: “Overall, productivity saw its largest fall in the second quarter since the three-day week.

"Hospitality was worst hit, with productivity in that industry falling by three quarters in recent months.”

The quarterly drop is the largest contraction in the UK economy since the ONS began capturing the data in 1955.

Compared with the same time a year ago, the UK economy has fallen by 21.7 per cent, the stats body said.

“It is clear that the UK is in the largest recession on record,” the ONS said.

For a country to be in a technical recession, it must post negative GDP figures for two consecutive quarters.

The ONS said the decline had been driven by a sharp 20 per cent fall in output in April 2020, the first full month of lockdown.

But the data for June show GDP increased 8.7 per cent month-on-month, a slight rebound as shops, restaurants and pubs were permitted to reopen.

The new figures follow grim ONS data showing the economy suffered its biggest drop in employment since 2009, with 730,000 fewer in paid employment in July than in March.

Boris Johnson on Tuesday urged Brits to brace for “bumpy months ahead” but vowed to make “colossal investments” in infrastructure and skills to stave off what Labour dubbed a "jobs crisis".

Responding to the GDP figures, Shadow Chancellor Anneliese Dodds went on the offensive, comparing the UK's economic performance to other G7 nations.

The Labour frontbencher said: “We’ve already got the worst excess death rate in Europe – now we’re on course for the worst recession too. That’s a tragedy for the British people and it’s happened on Boris Johnson’s watch.

“The Prime Minister will say there’s only so much he could do during a global pandemic, but that doesn’t explain why our economy is tanking so badly compared to other countries."

She added: “A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t. Now he must take responsibility, scrap the one-size-fits-all withdrawal of wage support and bring the health crisis properly under control.”