UK GDP Contracts At Record Pace In Q2

The UK economy contracted at a record pace in the second quarter though the decline was less severe than previously estimated, revised data from the Office for National Statistics showed Wednesday.

Due to the coronavirus containment measures, gross domestic product fell 19.8 percent sequentially. The rate was revised from a 20.4 percent fall estimated initially.

This was the largest quarterly contraction since quarterly records began in 1955 and marked the second consecutive quarterly decline after a fall of a revised 2.5 percent in the previous quarter.

On a yearly basis, GDP was down 21.5 percent in the second quarter, which was revised from -21.7 percent.

Further, data showed that GDP fell by a cumulative 21.8 percent in the first half of 2020.

The renewed covid-19 restrictions will probably mean that GDP stagnates in the fourth quarter, leaving economic activity marooned 5.5 percent short of its pre-crisis level, Ruth Gregory, an economist at Capital Economics, said. And the risk now is that renewed containment measures send the recovery into reverse.

There have been record quarterly falls in services, production and construction output. Services output contracted 19.2 percent, production output fell 16.3 percent and construction output decreased by 35.7 percent in the second quarter.

Private consumption, government consumption and gross capital formation also showed record falls in the second quarter.

Largely reflecting, reflects falls in spending on restaurants and hotels, household consumption fell by a revised 23.6 percent. Government consumption was down 14.6 percent.

Gross fixed capital formation decreased 21.6 percent and business investment fell by a revised 26.5 percent.

Another report from the ONS showed that the current account deficit narrowed to GBP 2.8 billion in the second quarter, or 0.6 percent of GDP. This was the narrowest since the second quarter of 2011.

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