UK economy heads towards recession with 20.4% GDP drop

738
store closures covid-19 economy pandemic lockdown
The GDP decline is the biggest the UK has ever seen - worse than anything during the financial crash
// The UK economy drops 20.4%, heading towards recession
// This could result in mass job losses, the ONS warns

The UK economy has suffered record slump with GDP plunging by 20.4 per cent during April’s coronavirus lockdown, when high street stores endured their first full month of being temporarily closed.

The fall is the biggest the UK has ever seen – worse than anything during the financial crash, highlighting the impact of the Covid-19 pandemic.

The economy was around 25 per cent smaller in April than it was in February and puts the nation on course for an anticipated recession, the ONS said.


READ MORE:


Although during the three months to April, accommodation and food services plummeted by 40.1 per cent, retail was one of the worst-affected sectors during the lockdown, with businesses claiming £3.3 billion to fund their furloughed staff salaries.

Wholesale and retail businesses were the worst hit, claiming £3.3 billion for 1.6 million workers.

The UK Government launched its jobs retention scheme in March to allow companies to retain their workers during the Covid-19 pandemic, with the Treasury paying up to 80 per cent of their salaries to a maximum of £2500 per month.

The ONS will not reveal what happened to the economy in May until next month, but it is likely to show another dramatic drop, coming before restrictions started to ease in some parts of the economy.

“In line with many other economies around the world, coronavirus is having a severe impact on our economy,” Chancellor Rishi Sunak said.

“The lifelines we’ve provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs – giving us the best chance of recovering quickly as the economy reopens.

“We’ve set out our plan to gradually and safely reopen the economy. Next week, more shops on the high street will be able to open again as we start to get our lives a little bit more back to normal.”

The ONS said: “April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall.”

Click here to sign up to Retail Gazette‘s free daily email newsletter

LEAVE A REPLY

Please enter your comment!
Please enter your name here