New figures from the National Bureau of Statistics (ONS) have reinforced suspicions that the UK economy suffered the biggest quarterly decline from April to June this year due to the impact of the coronavirus pandemic.
Gross domestic product – GDP – fell 19.8% in the second quarter of 2020. However, the figure is slightly lower than the previous 20.4% estimate that ONS originally filed in June, citing the “significant shock” of a vulnerable economy lockdown.
While the free fall of nearly 20% has been the biggest since the record began in 1955, Bank of England’s chief economist Andy Haldain warned that he had hit the temptation to fall into “contagious pessimism” about the possibility of a recovery in the UK.
He warned that the “catastrophe” of “catastrophe” in the fall at the beginning of the year has undermined attention in recent months from the economic bounce.
“Avoiding economic unrest attacks calls for a balanced and flexible approach to the words and actions of businesses and policymakers. By encouraging news about current needs, we will prevent fear of the future from being owned.”
Haldane added that he is not personally opposed to introducing negative interest rates to further boost the UK economy as speculations rise that the Bank of England could waive new measures as a share waiver against a second wave of fears.
Douglas Grant, director of Conister, a business and personal finance bank owned by Manx Financial Group (LON: MFX), commented on the latest ONS figures and expressed concerns for small businesses (SMEs) in an increasingly competitive environment based on both Covid-19 and longtime Brexit Grievances.
“The confirmed sudden decline of UK GDP reflects the harsh landscape facing many UK businesses, especially small businesses that have to work hard to float.
“For the SME sector, which enters the final quarter with the challenges of 2019 and 2020 (Brexit and Covid-19) bundled together, it is important to continue opening up new channels to distribute the necessary liquidity.
“Small businesses have shown a lot of adaptability and resilience in the face of changing consumer behavior, so it is important that government schemes (in collaboration with professional lenders) continue to support the sector, returning to pre-crisis growth levels as quickly as possible, avoiding the downward spiral of output and unemployment.”
