Great Britain has a strong economy
The British economy collapses
There has never been a slump in economic output like in the second quarter of the year in Great Britain since the statistics were kept: The gross domestic product (GDP) collapsed from April to June by 20.4 percent compared to the previous quarter, as the statistics office in London announced. Since the British economy shrank in the previous quarter, it is now officially in recession.
For comparison: the German economy contracted in the second quarter by 10.1 percent, only about half as much. But the corona pandemic has also hit Great Britain particularly hard. So far, according to Johns Hopkins University, 313,394 infections have been found in the United Kingdom and 46,611 people have died of COVID-19. After initial hesitation, Prime Minister Boris Johnson's government had implemented a tough lockdown that brought large parts of the economy to a standstill.
Decline like it has not for 100 years
The government's tough measures to contain the pandemic fell mostly in the second quarter. After the slump, however, the British economy was able to recover a little. In June economic output rose by 8.7 percent in a month-on-month comparison, according to statisticians in London.
"Great Britain pays a high price because the British government initially did not react adequately to the pandemic," Holger Schmieding told DW about the latest figures. The chief economist at Berenberg Bank added that although the government reacted too late, it finally reacted correctly. "Now there is a good chance of a third quarter recovery."
According to a forecast by the British central bank, the country's gross domestic product should fall by a total of 9.5 percent this year - an economic downturn the likes of which Great Britain has not experienced in around 100 years. According to this forecast, growth of nine percent should follow next year.
The crisis is already leaving its mark on the British labor market: the number of employees fell by 220,000 from April to June. The statistics office in London had already announced this on Tuesday. This means that more jobs have been lost in Great Britain during the Corona recession than since the financial crisis in 2009. Experts assume that some of the people without work have not tried to find a new job for the time being and that this is therefore not included in the unemployment rate.
In addition, the country has cushioned the consequences of the pandemic with a program that is based on the German short-time work, the "Job Retention Scheme". However, the program expires at the end of October. The central bank in London assumes that the unemployment rate could roughly double to 7.5 percent by the end of the year.
Brexit doesn't help
According to Berenberg economist Schmieding, Brexit also played a role in the slump. "The British economy has been weakened by Brexit for more than three years. You can see that in the reluctance to do business and investments," Schmieding told DW. However, this is only secondary to the pandemic.
ar / AR (rtr, dpa)
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