UK in deepest recession due to COVID-19 economy shutdown

The UK economy suffered its biggest slump on record between April and June as coronavirus lockdown measures pushed the country officially into recession.

The economy shrank 20.4% compared with the first three months of the year.

Household spending plunged as shops were ordered to close, while 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, saying: “A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t.”

How are ordinary people being affected?

Kate Treglown, 44, of Walthamstow in east London, is currently out of work as a result of the coronavirus crisis. She was made redundant from her advertising job at the end of July after being on furlough.

“I worked for 16-and-a-half years for an advertising agency that promoted live events. The work totally dried up in May,” she told the BBC

Kate says she feels “stuck in limbo” – keen to try something new, but unsure of when her children- who she has been home schooling – will return to school.

“There is work. There are jobs available. But when I look on LinkedIn, every single job has hundreds of applications, so competition is very stiff,” she says.

“I feel women are really carrying the burden of this pandemic with regards to the childcare, whether working or not. It’s made me feel quite depressed at times.

“My redundancy money is only going to last so long and I’m scared of what the future holds for us at the moment.”

Is there any sign of things getting better?

The Office for National Statistics (ONS) said the economy bounced back in June as government restrictions on movement started to ease.

On a month-on-month basis, the economy grew by 8.7% in June, after growth of 1.8% in May.

But Jonathan Athow, deputy national statistician for economic statistics, said: “Despite this, gross domestic product (GDP) in June still remains a sixth below its level in February, before the virus struck.”

Which parts of the economy have suffered most?

The ONS said the collapse in output was driven by the closure of shops, hotels, restaurants, schools and car repair shops.

The services sector, which powers four-fifths of the economy, suffered the biggest quarterly decline on record.

What is the government doing about it?

Official jobs figures released on Tuesday showed the number of people in work fell by 220,000 between April and June.

But in a BBC interview on Wednesday, Mr Sunak did not waver on ending the government’s furlough scheme of job subsidies, which is winding down and is due to end entirely after October.

“I think most people would agree that that’s not something that is sustainable indefinitely,” he told the BBC.

The chancellor said the government should not pretend that “absolutely everybody can and will be able to go back to the job they had” and said there would be support for creating jobs in new areas.

The opposition has been critical of the government’s handling of the economy during the pandemic.

Ms Dodds 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.”

Referring to the tapering of the furlough scheme, she said the government had “snatched away wage support for businesses that hadn’t even reopened yet”.

How are businesses coping?

Laura Tenison, founder of clothing firm JoJo Maman Bebe, told the BBC that the trading performance of her 90 stores was showing huge variations, with those in urban locations suffering from a lack of office workers and tourists.

“Those like York, Windsor, central London, Reading, Norwich – those ones are absolutely dire, really really awful,” she said.

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