UK economy plunges into recession for the first time since 2009 after massive second quarter contraction

Time 1 year ago

The UK is officially in recession today as figures show the economy plunged by a record 20.4 per cent between April and June.

Figures from the Office of National Statistics show a massive second quarter contraction which follows a 2.2 per cent fall in the previous three months. It makes the UK economy the worst in western Europe.

It’s the first time Britain has been in recession since the credit crunch of 2008 and 2009.


A recession is defined as two successive quarters of decline in gross domestic product (GDP).

The announcement comes just a day after the ONS revealed around 730,000 UK workers have dropped off payrolls of British companies since March, as reported by Car Dealer.

Jonathan Athow, deputy national statistician at the ONS, said: ‘The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

‘The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover.

‘Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

‘Overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months.’

The motor trade has been hit particularly hard by the slump in the economy. There has been widespread job losses announced and only last week figures from ASE Global showed the average dealer lost £125,000 per site during the second quarter.

Steve Nash, CEO of the IMI (Institute of the Motor Industry), said: ‘It is of course disappointing – but not really surprising – that the UK economy is in recession. However, whilst there are tough decisions being made by businesses in all sectors, in automotive we are also seeing a ‘keep calm and carry on’ attitude.

‘As of the end of July, 97 per cent of automotive businesses were trading, with around 72,000 jobs returned to work from furlough in the second half of July and an additional 49,000 planned to have returned by the second week of August.

‘The fact is our sector plays a crucial role in the underlying infrastructure of the UK economy. The key now is for automotive employers large and small to ensure they can keep one eye on the future – including preparing for the road to zero – whilst maintaining business for the here and now.’

Despite the record-breaking GDP slump expected for the second quarter, June’s figures are eagerly awaited by experts as they are predicted to show an eight per cent bounce back.

The predictions of a reversal are based off a far-lower-than-expected 1.8 per cent rebound month-on-month in May.

The Bank of England has already said it expects the downturn to be less sever than previously predicted, but warned the hoped ‘V-shape recovery’ wasn’t likely to happen, saying the economy is not expected to jump back to pre-virus levels until the end of 2021.

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Philip Shaw at Investec said: ‘We are forecasting a monthly increase of 8.1 per cent as more of the economy, such as ‘non-essential’ retailing, opened up in mid-June.’

He added: ‘July’s figures next month should contribute strongly to a material rebound in the third quarter, but the test will come in the autumn when there are no further ‘lockdown releases’ to boost the economy, some restrictions (perhaps just local) are imposed and programmes such as the furlough scheme are wound up.’

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer.

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