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“Today’s figures confirm that hard times are here,” UK finance minister Rishi Sunak stated in a press release. “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.”
Compared with the top of 2019, UK financial output fell by a cumulative 22.1% within the first six months of 2020, a worse end result than Germany, France and Italy, and double the 10.6% fall recorded within the United States, the Office for National Statistics stated.
“The larger contraction primarily reflects how lockdown measures have been in place for a larger part of this period in the UK,” the ONS stated.
Britain imposed a strict lockdown two weeks later than Italy, 10 days after Spain and per week after France, regardless of swelling coronavirus circumstances. That meant it took longer to get the unfold of the virus beneath management, which extended the necessity for restrictions that stored many companies closed.
For instance, Italy allowed eating places, cafes and hairdressers to reopen within the center of May, whereas the United Kingdom waited till July four to do the identical. Germany allowed some outlets, similar to bookstores, bike outlets and automobile dealerships, to reopen as early as April 20, virtually two months earlier than nonessential stores reopened within the United Kingdom.
That rest of restrictions in June delivered a direct enhance to the UK economy, with GDP rising 8.7% on the earlier month, in response to the ONS.
The UK economy is closely reliant on companies and family spending, each of which posted report declines within the second quarter, as customers who had been holed up at dwelling spent much less cash and saved extra. In addition, hundreds of thousands of staff had been furloughed and lots of have now been laid off.
Kallum Pickering, a senior economist at Berenberg, stated the UK GDP figures don’t bode effectively for the remainder of the yr.
“Typically, recession data are subject to heavy revisions,” he stated in a analysis observe. “Nevertheless, taken at face value, the bigger-than-expected contraction suggests some downside risk to our call of a 9.5% contraction in full year 2020.”
The foremost enterprise foyer, the Confederation of British Industry, stated a “sustained recovery is by no means assured” given the continuing pandemic and the cashflow constraints hobbling many firms. Continued uncertainty over the character of the longer term UK-EU relationship is not serving to.
“The dual threats of a second wave and slow progress over Brexit negotiations are also particularly concerning,” Alpesh Paleja, lead economist on the CBI, stated in a press release.
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