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UK enters recession after economy slumps 20.4% in Q2

UK enters recession after economy slumps 20.4% in Q2

Mubasher: The UK economy has suffered its largest-ever contraction during the second quarter (Q2) of 2020 due to the coronavirus lockdown measures, which pushed the country officially into recession, BBC reported on Wednesday.

During the April-June period, the economy sank by 20.4% when compared to the first quarter of the year.

Household spending declined as shops were ordered to close and factory and construction output fell, driven by the closure of shops, hotels, restaurants, schools, and car repair shops.

The services sector, which contributes four-fifths of the economy, saw the highest quarterly decline on record, and factory shutdowns led to the slowest car production since 1954.

This has pushed the UK into its first technical recession, defined as two consecutive quarters of economic decline, since 2009.

However, the economy bounced back in June as restrictions on movement started to ease, according to the Office for National Statistics (ONS).

"Despite this, gross domestic product (GDP) in June still remains a sixth below its level in February, before the virus struck," revealed deputy national statistician for economic statistics, Jonathan Athow.

Based on official jobs figures, the number of people in work fell by 220,000 between April and June.

“Hundreds of thousands of people have already lost their jobs, and sadly in the coming months, many more will,” said UK Chancellor, Rishi Sunak.