The UK is likely to be in the deepest economic recession since records began, after gross domestic product (GDP) contracted by 5.8% in March 2020.
Figures from the Office for National Statistics showed the economy shrank by 2% in the first three months of 2020, with bigger quarterly slumps set to follow.
Lockdown measures were imposed in the UK on 23 March 2020 in a bid to keep a lid on the coronavirus pandemic.
Chancellor Rishi Sunak said that “just a few days of impact from the coronavirus” in March has put the economy into decline, while conceding ”the UK economy will face a significant recession this year”.
A technical recession is defined as two consecutive quarters of negative economic growth, with the UK last experiencing one in Q2 2009.
Economists said it was genuinely difficult to overstate the economic damage caused by COVID-19 since March 2020.
Tej Parikh, chief economist at the Institute of Directors, said:
“These figures provide a sobering first glimpse of the economic turmoil caused by the outbreak.”
Suren Thiru, head of economics at the British Chambers of Commerce, said:
“The speed and scale at which coronavirus has hit the UK economy is unprecedented and means the Q1 decline is likely to be followed by a further, more historically significant, contraction in economic activity in Q2.”
The 2% economic contraction in Q1 2020 was slightly better than the Bank of England’s forecast of a 3% drop in the first three months of the year.
However, the Bank expects a 25% fall in GDP for the three months to June 2020, and for the UK economy to recede by 14% by the end of 2020.
Should that come to fruition, that would be the UK’s deepest annual downturn since 1706, according to the Bank’s reconstructed data.
It also said the fall in economic activity should only be temporary, and GDP is expected to pick up “relatively rapidly” once social distancing measures are relaxed.
Talk to us about your finances.