The largest contraction reported by any major economy so far, and a wave of job losses is set to hit later in 2020. Official figures also showed the world’s sixth-biggest economy entered a recession as it shrank for a second quarter in a row. There were signs of a recovery in the month of June when output grew by 8.7 per cent from May. Scale of the hit to gross domestic product may revive questions about Prime Minister Boris Johnson’s handling of the COVID-19 pandemic. Britain has suffered Europe’s highest death toll, with more than 50,000 deaths linked to the disease between Mar 1 and Jun 30.
Bank of England forecast it would take until the final quarter of 2021 for the economy to regain its previous size, and warned unemployment was likely to rise sharply. Second-quarter slump in GDP was almost exactly in line with economists and exceeded the 12.1 per cent drop in the euro zone and the 9.5 per cent quarter-on-quarter fall in the United States. Britain went into lockdown in late March, after other European countries, meaning more of the hit was reported in the second quarter than in the first three months of the year when Britain’s economy shrank by less than the euro zone’s.
Businesses are wary about the outlook, and unemployment risks rising sharply towards the end of this year when a job support programme ends. Employers have already shed more than 700,000 jobs since March, according to tax data.