UK records deepest recession among top economies

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UK records deepest recession among top economies

Wednesday, August 12, 2020

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LONDON, United Kingdom — The British pound fell against the dollar and euro on Wednesday as official data showed Britain's coronavirus-ravaged economy suffering its deepest recession on record.

London's benchmark FTSE 100 index, featuring multinationals earnings in dollars, rallied for a second day running.

The British economy has recorded the deepest coronavirus-related slump among the world's leading industrial economies after official figures showed it shrinking by a fifth in the second quarter alone.

The 20.4 percent quarter-on-quarter drop in the April to June period is worse than anything since records began in 1955, the Office for National Statistics said.

Following a 2.2 percent contraction in the first three months of the year, the UK economy is now in recession, commonly defined as two quarters of contraction.

Britain's recession is deeper than those recorded by comparable economies in Europe, notably Germany, France and Italy, or that of the United States. The other Group of Seven economies, Japan and Canada, have yet to post second-quarter numbers but no economist thinks they will be as bad as the UK's.

Kallum Pickering, senior economist at Berenberg Bank, said the main reason why the UK economy has fared so badly is that the lockdown was introduced at “a later stage” in the outbreak, particularly when compared with others in Europe.

By the time Prime Minister Boris Johnson introduced the lockdown on March 23, the UK had “a bigger first wave” than could have otherwise been the case, meaning restrictions had to persist for relatively longer. Shops in Germany, for example, reopened on May 6 compared with June 15 in England.

The UK has the highest official coronavirus-related death toll in Europe with 46,611 deaths. The actual death toll is believed to be higher as the official dataset only incorporates those who have tested positive for COVID-19.


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