Cyprus Mail

UK GDP shrinks by 20.4% in second quarter

Britain's Prime Minister Boris Johnson speaks at the House of Commons

UK gross domestic product (GDP) is estimated to have fallen by a record 20.4 per cent in the second quarter (Apr to June) 2020, marking the second consecutive quarterly decline after it fell by 2.2 per cent in the first quarter (Jan to Mar) 2020, the UK Office of National Statistics (ONS) reported on Wednesday.

This is the largest quarterly contraction in the UK economy since Office for National Statistics quarterly records began in 1955, and reflects the ongoing public health restrictions and forms of voluntary social distancing that have been put in place in response to the coronavirus (COVID-19) pandemic. In level terms, real GDP was last lower in the second quarter of 2003. Compared with the same quarter a year ago, the UK economy fell by 21.7 per cent.

Private consumption accounted for more than 70 per cent of the fall in the expenditure measure of GDP in the second quarter of 2020, falling by 23.1 per cent; there were also notable falls in gross capital formation and government consumption, the ONS report showed.

When compared with the fourth quarter, (Oct to Dec) 2019, UK GDP decreased by 22.1 per cent in the second quarter of this year.

Despite the weakness in Q2 2020, there was some pick up in June as government restrictions on movement started to ease; see GDP monthly estimate, UK: June 2020.

There have been record quarterly falls in services, production and construction output in the second quarter, which have been particularly prevalent in those industries that have been most exposed to government restrictions, according to the report. Services output decreased by 19.9 per cent in the second quarter of 2020, while production output fell by 16.9 per cent, and construction output contracted by 35.0 per cent.

The ONS noted that GDP estimates for the first and second quarters of 2020 are subject to more uncertainty than usual as a result of the challenges we faced in collecting the data under government imposed public health restrictions.


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