The UK has entered the deepest recession since records began as the economy shrank again in the second quarter, contracting by 20.4 per cent, according to data from the Office for National Statistics (ONS). 
The fallout from Covid-19 has continued to impact the UK economy as it fell into recession for the first time in 11 years during the global financial crisis.
Having contracted by 2.2 per cent during the first quarter, a further fall in GDP was recorded during Q2 – which captured the full lockdown period – leading to a widely-anticipated technical recession of two consecutive quarters of negative growth.
Source: ONS
April saw the largest-ever monthly contraction in GDP – falling by 20 per cent – reflecting that the most intense part of the economic decline came at the height of the lockdown.
Compared with other developed economies the UK has experienced one of the biggest slump during the first half of the year, according to the ONS, highlighting the impact of the coronavirus and the response.
The 22.1 per cent cumulative fall in GDP experienced by the UK was more than double that experienced by the US during the same period (10.6 per cent) and slightly below the 22.7 per cent recorded by Spain.
“The larger contraction of the UK economy primarily reflects how lockdown measures have been in place for a larger part of this period in the UK compared with these other economies,” the ONS reported.
The UK was later to lock down than some other countries, having imposed national lockdown conditions on 26 March.
As such, the UK has had 312,789 confirmed cases of coronavirus and 46,595 deaths, with ongoing social distancing, quarantine and lockdown measures.
And while extreme efforts have been made by the UK government to help shield the economy from the impact of coronavirus, including billions in fiscal stimulus and a national furlough scheme to supported closed businesses, it hasn’t been enough to keep a recession at bay.
The ONS said the Q2 contraction was driven by widespread closures of services (a key sector for the UK economy), production and construction industries, all sectors heavily exposed to the government’s lockdown restrictions.
Source: Office for National Statistics (ONS)
Nevertheless, the recession has been widely expected with the Bank of England predicting a contraction in economic output just one week ago in its Monetary Policy Report.
Sebastian Mackay, multi-asset fund manager at Invesco, said: “The UK GDP figures clearly show the economic consequences of the pandemic but they also highlight that the structure of economies matters for the speed of recovery from this crisis.
“The UK’s reliance on services means we have underperformed other European countries despite a bounce-back in construction and manufacturing in June.”
The ‘bounce back’ was one of the few notes of positivity by the ONS, which said the economy had already begun its recovery after growing by 8.7 per cent in June, coinciding with the easing of lockdown conditions and non-essential shops re-opened.
Indeed, eToro analyst Adam Vettese said the news could have been much worse.
“On a brighter note – if you can call it that – the slump was marginally better than predicted and, for now at least, the furlough scheme is keeping a cap on job losses,” he said.
“We can also take heart in the fact that the economy bounced back 8.7 per cent in June, as lockdown was eased and Brits got back to work.
“But clearly the road to recovery will be long and possibly painful at times. It will take months and perhaps even years, rather than weeks, before the economic scars from this pandemic heal.”
However, the positive news of recent months could be undone if a second wave of the coronavirus hits the UK, AJ Bell’s personal finance analyst Laura Suter noted.
“A second wave of the virus will hamper any rebound, as will the effect of some of the localised shutdowns we’ve seen in recent weeks,” she said. “The much-talked-about V-shaped recovery of the UK economy relies on no second lockdown and also on UK trade talks being successful – presenting two large uncertainties.”