london skyline

United Kingdom GDP Q2 2020

United Kingdom: GDP records largest fall on record in Q2

GDP declined at a quicker pace of 20.4% on a seasonally-adjusted quarter-on-quarter basis in Q2, far below the 2.2% contraction recorded in Q1, as the full impact of lockdown measures introduced in late March was felt.

Private consumption fell at a sharper rate of 23.1% s.a. qoq in Q2 from the 2.9% decline in Q1, amid the closure of shops and restaurants. Public consumption declined at a steeper pace of 14.0% in Q2 (Q1: -4.1% s.a. qoq) due to lower health and education spending. Fixed investment dropped 25.5% in Q2, down from the 1.1% decrease in the prior quarter.

On the external front, exports of goods and services contracted at a more moderate pace of 11.3% in Q2 (Q1: -13.5% s.a. qoq). Conversely, imports of goods and services dropped at a more pronounced rate of 23.4% in Q4 (Q1: -9.4% s.a. qoq). The external sector contributed positively to the GDP reading as a result.

On an annual basis, economic activity contracted 21.7% in Q2, down from the previous period’s 1.7% fall.

Although the economy was depressed over Q2 as a whole, activity did recover markedly in June as lockdown measures were lifted, and this momentum should continue ahead.

As James Smith, economist at ING, comments: “We’d expect to see another decent bounce in GDP during July when a wider range of service-sector businesses were allowed to open.”

That said, downside risks to the outlook abound: They include a possible notable rise in the unemployment rate when the wage subsidy scheme ends in October, and the potential reintroduction of restrictions if coronavirus cases surge.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest