United Kingdom Summary
- In the first half of 2020, the UK GDP contracted by 22.1%, with a 2.2% contraction in Q1 and a 20.4% fall in Q2.
- The falls were broad-based across the sectors.
- More recent monthly data showed that GDP grew by 6.6% in July, following growth in June (+8.7%) and May (+2.4%) and its record fall in April 2020 (-20%).
- However GDP levels remain 11.7% below pre-COVID levels.
As lockdown eased, business activity started to recover.
- UK PMI business survey data for August showed a further increase in business activity as more businesses reopened and (domestic) demand strengthened.
- The pick-up in activity was seen across the Services, Manufacturing and Construction sectors, though export orders continue to recover at a slower pace than domestic.
UK saw the sharpest increase in redundancies since 2009.
- In May to July 2020, the UK employment rate rose to 76.5% and the unemployment rate increased to 4.1%, due to a fall in the inactivity rate which fell to 20.2%.
- However, UK redundancies increased by 48,000 in the three months to May to July, its sharpest increase since 2009.
- HMRC data suggest an estimated 16% of UK employments were partially or fully furloughed at the end of July.
Inflation fell significantly in August.
- CPI inflation fell to 0.5% in August 2020 – its lowest rate since December 2015 - down from 1.1% in July 2020.
- The slowdown in August was mainly driven by the fall in restaurant/cafe prices due to the Eat Out to Help Out scheme.
Risks to the outlook remain skewed to the downside.
- The Bank of England forecast UK GDP to fall 9.5% in 2020 and gradually recover to pre-Covid levels at the end of 2021, while unemployment is expected to rise to 7.5% in 2020 before gradually declining.
There is a problem
Thanks for your feedback