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Tags Current Affairs

Recession in UK

Date: 13 August 2020 Tags: Miscellaneous

Issue

The British economy has recorded the deepest coronavirus-related slump among the world’s leading industrial economies.

 

Background

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

 

Details

  • The 20.4% quarter-on-quarter drop in the April to June period is worse than anything since records began in 1955.

  • 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.

  • The British government hopes additional measures such as the reopening of pubs and restaurants and a return to offices will further fuel the recovery.

  • The British government has kept a lid on the official unemployment numbers, through a salary support package that has given hard-pressed firms the opportunity to retain workers rather than fire them.

  • Under the Coronavirus Job Retention Scheme, the government has been paying a large chunk of the salaries of workers retained.

  • The British economy faces further headwinds aside from the pandemic, notably its future trading relationship with the European Union following the UK’s departure from the bloc in January.

  • The UK is currently in a transition period whereby it remains part of the EU’s tariff-free arrangements until the end of the year.

  • The future economic relationship has yet to be agreed, meaning tariffs could be imposed on traded goods between the two sides come the start of next year.

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