Although the United States saw a significant decrease in economic output during 2020’s second quarter, the UK experienced an even worse outcome.
The economy’s output shrank by over 20%, making it the worst quarterly slump on record in history. Although the COVID-19 pandemic drove the results, it is still the deepest recession of any major economy.
Although the US experienced a 31.4% drop in economic activity, that figure was only a 10.6% drop than the GDP.
France and Italy both suffered over 15% drops in relation to the second quarter of 2020. The cause for these massive declines involves the dependence on retail and services in those economies.
Why Did the UK’s Economy Decline Steeply?
The issue with the UK’s financial results involves the lockdown length imposed on people. Most businesses were stopped from providing services or selling goods for the entire quarter.
Although the United States had a lengthy lockdown period that started in March, different states took unique approaches. Some of them barely put in any restrictions, while others used significant lockdown measures to restrict movement.
The states that followed the UK’s approach are seeing similar problems with their economy.
Even when comparing Italy to the United Kingdom, restaurants, cafés, and hairdressers were allowed to reopen in May for Italians. It wasn’t until July 4 that those in the UK could do the same.
Germany faired even better because it allowed car dealerships, bike shops, bookstores, and other businesses to reopen as early as April 20.
Since the restrictions were lightened, the UK economy saw an 8.7% increase in activity from the previous month. It’s a start, but more needs to be done to rescue people trapped near the poverty line.
Although the UK economy expects to recover, a fast response is not likely. Another wave of COVID-19 cases, shedding almost one million jobs, and slow Brexit negotiations threaten to make a 10% contraction for 2020.