The British economy, which contracted sharply in March and April with a slight rebound in May, is facing its worst recession in 300 years due to the coronavirus pandemic, a government agency said Tuesday.
British Gross Domestic Product (GDP) fell a 19,1% From March to May compared to the period from December to February due to the impact of the coronavirus, with a rebound of only 1.8% in May, the Office for National Statistics (ONS) announced on Tuesday.
The minimum increase in May makes analysts doubt the possibility of a recovery in “V”, that is, a recovery as abrupt as the abrupt contraction was.
Especially considering that GDP is still a quarter below its February level, before the coronavirus hit the British and world economy squarely.
In this context, the Office of Budgetary Responsibility (OBR), the government budget oversight body, warned in a report on Tuesday that the UK “On track to record its largest annual contraction in GDP in 300 years”, of more than 10%.
The ONS points out that with the first measures adopted in mid-May to make the confinement established on March 23 more flexible, “manufacturing production and housing construction have shown signs of recovery, and some companies have returned to work.”
The building It was particularly affected by the restrictions: the sector fell almost 30% between March and May.
In services, most of the British economy, “We have seen a rebound in retail with record online sales,” adds ONS’s Jonathan Athow, quoted in the statement.
Coronavirus joins Brexit
However, due to travel restrictions and persistent confinement in other sectors in May, “activity continued to drop in many fields,” he adds.
The non-essential businesses reopened In June, restaurants, bars and hotels, cinemas and museums received the green light in early July.
But not all of them have resumed their activity, since mandatory distancing measures are sometimes an obstacle to their profitability prospects.
Others, such as concert halls or convention centers, are not yet authorized to open, and many warn that they risk bankruptcy.
“If there is an economic recovery in V, the UK is currently at the bottom of the V,” says Ulas Akincilar, head of operations at online brokerage platform Infinox, who notes that the OECD predicts for the country the worst recession in developed economies, with a contraction of more than 11% this year.
And that is if there is not a second wave of the pandemic.
In an attempt to sustain the economy and, above all, to prevent the lasting destruction of millions of jobs, the British government has launched an arsenal of measures, including partial unemployment benefits, of which more than 9.3 million employees have benefited.
This plan to support the economy “raises the debt of the public sector to 322,000 million pounds (about 400,000 million dollars, ndlr), its highest level in peacetime in more than 300 years ”, according to the central scenario of the OBR, which does not take into account the cost of the new measures announced on July 8 by the Minister of Finance.
The British economy is in a particularly difficult situation because the impact of the coronavirus is compounded by the threat of a brutal break with the European Union.
Time is short to find a postbrexit agreement with Brussels before the end of the transition period in late December, but negotiations between London and the EU have been stalled for weeks.
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