UK economy falls into recession
Lockdown measures introduced as a result of the coronavirus (COVID-19) pandemic have pushed the UK economy into recession, data published by the Office for National Statistics (ONS) has revealed.
The data showed that 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.
Commenting on the 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) to aid the recession.
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