Commenting on the UK’s Gross Domestic Product figures for June, released this morning (12 August), Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:
The record contraction in GDP during the second quarter of 2020 is no surprise given that large swathes of the economy had been in lockdown for the best part of three months. The 8.7% monthly rise recorded in June is positive, but the economy is still 17.3% smaller than it was before the crisis.
Social distancing measures continue to affect the supply side of the economy, with many restaurants and bars running at less than capacity, which impacts their productivity and profit. Consumers remained wary about returning to shops and restaurants. Initial take-up of the Government’s Eat Out to Help Out scheme has been reasonably positive, but we will have to wait and see what impact this has had and whether this is a lasting trend.
Whilst the positive growth in the last two months indicates we could still be looking at a V-shaped recovery, it should be remembered the downturn is far from over. We could well see unemployment rise in the coming months as the Government’s job retention schemes begin to unwind. It is likely that it will take many months to recover the lost growth and we do not expect see GDP returning to pre-Crisis level until the end of next year or even 2022.