The UK is set for record-breaking economic growth in third quarter, but some economists are fearing that the strong initial rebound may quickly lose momentum.
Economic Recession in the UK
The UK is officially in a recession for the first time in 11 years. Following the coronavirus pandemic, the UK economy has suffered its biggest slump between April and June. The UK economy shrank 20.4% compared with the first three months of the year. This was due to a plunge in household spending as shops and restaurants were ordered to close, as well as reduced factory and construction output. Earlier in August, Chancellor Rishi Sunak reported that the government was ‘grappling with something that is unprecedented’ and that it was a ‘very difficult and uncertain time’ for the economy.
Economic Upturn as Coronavirus Measures Ease – but will it last?
The Office of National Statistics (ONS) reported that the economy bounced back in June as the government restrictions on shops and movement started to ease. Jonathan Athow, deputy national statistician for economic statistics said that despite the sudden growth in June, the gross domestic product (GDP) of the UK still remains a sixth below its level in February.
New data has suggested that the UK economy may experience an unprecedented economic growth in the third quarter. Household spending and consumer spending – including leisure – during the first two weeks of August have already exceeded the same period one year earlier. This growth is the first that has occurred in the UK economy since the coronavirus lockdown was introduced in March.
However, economists are weary of this initial spike in consumer spending. The predicted GDP for September 2020 is set to rise by 14.3 per cent, reversing 55 per cent of the 20.4 per cent drop in output in three months to June 30.