A Record Decline in them the UK Economy
Istanbul/ London- In the UK a record decline in the economy. In the second quarter of this year, GDP fell by 20.4% compared to three months earlier, highlighting the worst performance of all the developed economies of the G7 due to Covid-19.
The slowdown recorded by the services and construction sector caused the collapse, but the UK economy is inevitably also affected by the decision linked to Brexit which will cause a revision of trade treaties with the countries of the European Union. With the second quarter GDP data, the United Kingdom also officially entered a technical recession, after the GDP had dropped by 2.2% in the first quarter: this is the first recession since 2009, with the financial crisis.
Overall, in the first six months of the year, the British economy contracted by almost 22%, a decline three times higher than that recorded in the financial crisis of 2008-09. For Prime Minister Boris Johnson, it is time to take action by introducing new aid to the economy.
“The UK’s negative performance relative to other developed countries reflects a longer lockdown period and a relatively broader service sector – the area hit hardest by social distancing.
The UK economy has started to recover, but unemployment is set to rise sharply as support from the Coronavirus Job Retention Scheme wanes.
The recovery will require further support from the government, while the BoE could certainly cut interest rates to zero – currently at 0.1% – and increase its bond purchase program before the end of the year.
Reaching a new trade agreement with the EU before the country leaves the customs union and the European single market is essential, in order to avoid the double shock of the pandemic and the possible imposition of duties by the UK’s main trading partner Said David Riley, Chief Investment Strategist, BlueBay Asset Management.
Estimates for the next months of 2020
Just in recent days, the Boe (Bank of England) had revised upwards the estimates on UK GDP at the end of the year, with a recession now expected to be 9.5% against the previous 14% following the first signs of recovery in the economic situation. However, a return of GDP to the pre-pandemic level is not expected before 2022.
The -20.4% recorded by the United Kingdom in the second quarter compares with the -12.1% achieved by the Eurozone from April to June. Among the Member States, Spain (-18.5%) recorded the largest decline compared to the previous three months, followed by Portugal (-14.1%) and France (-13.8%), Italy (-12, 4). The locomotive of Europe, Germany, stops at -10.1%.
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UK Records A Record Decline in its Economy - /10
UK records a record decline in its economy. In the second quarter of this year, GDP