Uk economy in crisis-historic 20% slump in the economy

UK economy heading for sharpest decline in annual output for 300 years

Britain´s economy ravaged by COVID-19 pandemic has slumped almost one-fifth  (20%)  in last three months. The economy is heading for sharpest decline in annual output for 300 years, official data showed that was released on Tuesday.

The Office for National Statistics (ONS) said gross domestic product plunged 19.1 percent in the three months to the end of May "as government restrictions on movement dramatically reduced economic activity".

The Office for Budget Responsibility, in charge of the government´s economic forecasts, said the "UK is on track to record the largest decline in annual GDP for 300 years", estimating that the economy could shrink by as much as 14.3 percent in 2020.

Britain's economy shrank by a quarter over March and April as entire sectors were shuttered by the coronavirus lockdown in what looks likely to be the bottom of a "catastrophic" crash before a long and slow recovery.

The economy contracted by 20.4 percent in April from March, when it shrank by nearly six percent. It was 24.5 percent smaller than in April 2019. Prime Minister Boris Johnson said the figures were no surprise as Britain's huge services sector was being hit particularly hard by social distancing measures, but he said recovery would follow.

With much of the economy still mothballed in May and June, the UK is heading for one of its deepest recessions ever — the Organization for Economic Cooperation and Development warned that the UK is set to be the hardest-hit industrial economy this year.

Unemployment has gone up during the pandemic but government support measures have helped keep a lid on the increase.

Frances O’Grady, general secretary of the Trades Union Congress (TUC), said targeted support for hard-hit sectors of the economy is needed, as well as a jobs guarantee to help those who lose work. “The more people in work, the faster we will work our way out of recession,” she said.

A more detailed look at the figures from the Office for National Statistics show that all areas of the economy were hit during the month, in particular pubs, education, and health and car sales.

Jonathan Athow, Deputy National Statistician for Economic Statistics, said April’s fall is “the biggest the UK has ever seen” and “almost 10 times larger than the steepest pre-Covid-19 fall.”

The government is coming under mounting pressure to relax the social distancing guidelines, as well, in order to help the economy recover. In the UK people have to remain 2 meters (6-1/2 feet) apart, which is more than most countries. The government says the required distance is under constant review.

                                                            Khalid Bhatti