The UK has been tipped into the “largest recession on record”, according to official figures charting the impact of the coronavirus crisis on the economy.
The Office for National Statistics (ONS) reported that the enforced hibernation of activity through the COVID-19 lockdown meant gross domestic product (GDP) slumped by 20.4% in the second quarter of the year following a dip of 2.2% during the first three months of 2020.
It determined that, by the end of June, the economy was a sixth below February’s pre-crisis level – as a monthly recovery for growth, which began in May, gathered further momentum during June.
April proved the biggest drag as it was the first full month of curbs on non-essential businesses and services but was followed by month-on-month growth of 2.4% in May and 8.7% during June as restrictions were relaxed.
The effects of the lockdown have stoked a crisis for employment, with separate figures released on Tuesday showing the biggest slump for employment for more than a decade in the April to June quarter.
Data covering July showed 730,000 fewer people on payrolls since the lockdown started.
John Lewis, Boots, M&S, British Airways, WH Smith and Debenhams have been among a wealth of well-known names cutting jobs to date, to save costs.
In its update on the economy on Wednesday, the ONS also pointed to a record fall in productivity during the second quarter of the year, as more than nine million workers were placed on furlough.
It measured that output per worker fell by a fifth compared with the first three months of 2020.
ONS deputy national statistician Jonathan Athow said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.
“The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover.
“Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.
“Overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months.”
The plunge in GDP currently leaves the UK second only to Spain in suffering the worst hit to output, among major economies, during the first six months of the year.
At 22.1% it is double the impact witnessed in the US.
Economists have pointed to the UK being particularly exposed because of its reliance on consumer spending.
Chancellor Rishi Sunak said: “I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here.
“Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.
“But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity.”
In response, Labour accused the government of bungling the battle against COVID-19.
Shadow chancellor Anneliese Dodds tweeted: “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 our country and it’s happening on the PM’s watch. A downturn was inevitable after lockdown – Johnson’s jobs crisis wasn’t.”
While the worst may be over for economic growth, it is inevitable that the worst is yet to come for jobs.
Last week, the Bank of England forecast a better-than-expected pick-up in growth but said it would take until the final quarter of 2021 for the economy to regain its previous size.
It is expecting the unemployment rate, currently at 3.9% to hit 7.5% by the year’s end as the furlough scheme is wound down.