The UK will be officially declared in recession for the first time since the financial crisis on Wednesday, when figures show the pandemic plunged the economy by a record 21% between April and June.
The Office for National Statistics (ONS) is expected to confirm the mammoth contraction in the second quarter, the worst in Western Europe, and the UK’s nosedive into recession after a 2.2% decline in the first three months of 2020.
A recession is defined as two consecutive quarters of decline in gross domestic product (GDP) that have not been seen in the UK since 2008 and 2009 during the financial crisis.
It comes after ONS data showed that since March, when the coronavirus lockdown began, around 730,000 UK workers have been struck off the payrolls of UK companies, a sign of the strain the pandemic has put on the economy.
Employment also fell by the largest amount since 2009 between May and June.
Despite the record-breaking GDP slump expected for the second quarter, experts will be closely monitoring the monthly numbers for June. The forecasts assume a strong 8% recovery as lockdown restrictions continued to ease.
This follows a well below expectations recovery of 1.8% compared to the previous month in May.
Attention now turned to the recovery, especially after the Bank of England announced last week that the downturn may be less severe than initially feared, but the UK recovery could take longer than previously forecast.
It projected a 9.5% decline in GDP this year after warnings in May of a 14% plunge in 2020.
Hopes of a V-shaped recovery have been dashed, however, and the economy is not expected to bounce back to pre-virus levels by the end of 2021.
Investec’s Philip Shaw said, “We forecast an 8.1% monthly increase as more industries such as ‘non-essential’ retail open in mid-June.”
He added, “Next month’s July numbers should add heavily to a significant rebound in the third quarter, but the test will take place in the fall, when there are no more“ lockdown releases ”to stimulate the economy. Some restrictions (possibly only local) are imposed on it and programs such as the vacation program are run. “