UK ECONOMIC RECESSION 2020

Britain’s economy shrank by a record 20.4% in the second quarter of the year.

The biggest slump has been recorded between April and June when the

country was on lockdown due to the coronavirus and this has officially put the

country’s economy into recession after 11 years.

To understand the depth of the slump lets look at the percentage of slump

recorded in the first quarter of FY 2020, which is, 2.2%. This is the deepest

recession recorded by any major global economy till date. France, Italy and

Germany have recorded an economic downfall of 18.9%, 17.1% and 11.9%

respectively, which is again way below the downfall experienced by the United

Kingdom. Even in Singapore, the slump is close to 43% as their GDP primarily

consists of tourism.

When there is a constant contraction in two consecutive quarters, a recession

is said to have started.

Why is the slump so high?

The service sector which constitutes of 4/5 th (80% of the total GDP) of the

drivers of the economy, suffered the biggest decline, quarterly, on record. For

e.g., restaurants, schools, salons etc.

Forecasts for the global economy

According to the World Bank, the global economy will shrink by 5.2% this year

which is the largest fall since the Second World War. And it also expects the

majority of the countries of the world to go into recession. (first time since

1870)