UK Economy Records Historic 19.8% Decline in Q2

LONDON, KOMPAS.com – The UK economy shrank by 19.8 percent in the second quarter of 2020 as the Covid-19 crisis creates historic economic hits in the country.

Although it was a record collapse of the UK economy, the decline was slightly smaller than first estimated.

The Office for National Statistics (ONS) said that the initial estimate in the three months to June was of a quarterly 20.4 percent crash.

Though the British economy slightly missed estimates, the economic downturn is still more than any other major advanced economy.

Read also: UK Public Debt Exceeds £2 Trillion as Pandemic Strains National Economy

The fall was the biggest since the ONS records began in 1955. Other data have suggested Britain is on course for its biggest annual fall since the 1920s.

The UK economy had already shrunk by 2.5 percent in the January-March period as the country entered lockdown in late March.

Read also: UK Economy Enters Recession Stemming from Coronavirus Lockdowns

Output has rebounded in recent months but the recovery looks to be fading with rising coronavirus cases and forecasts of a jump in unemployment as the government scales back job support.

"The renewed Covid-19 restrictions will probably mean that GDP stagnates in Q4, leaving economic activity marooned 5.5 percent short of its pre-crisis level," Ruth Gregory of consultancy Capital Economics said.

"And the risk now is that renewed containment measures send the recovery into reverse," she added.

Read also: Boris Johnson Considering Second Round of Coronavirus Lockdowns in UK

Households saved a record 29.1 percent of their income, up from 9.6 percent in the first quarter, as they were unable to spend in many shops and restaurants during the lockdown, while incomes were supported by a government job program which ends next month.

Heavy toll

Britain has suffered Europe's highest death toll from Covid-19, with more than 42,000 fatalities.