June 2020 GDP Tracker

UK Set to Lose a Quarter of Output in Q2
 

Main points

• The UK economy looks set to decline by 20 to 25 per cent in the second quarter of 2020, a significantly steeper decline than the first quarter, reflecting the full impact of lockdown measures.
• According to the ONS estimate published this morning, the UK economy contracted by 10.4 per cent in the three months to April, broadly in line with what we forecast last month (figure 1).
• The contraction in growth reflects negative contributions across all the sectors.
• The May easing of the lockdown, suggests that April might have marked the trough in activity.

“As we have suggested, around a quarter of GDP is lost when the lockdown is fully in place. The latest ONS estimate represents a record monthly decline for UK GDP, with all sectors experiencing record falls. However, the economy now appears to have bottomed out, as recent survey evidence suggests an easing in the rate of contraction in the manufacturing and services sector. The re-opening of non-essential stores from 15 June, coupled with the government’s continued support should aid a gradual, albeit limited, recovery in domestic activity.”

Dr Kemar Whyte
Senior Economist - Macroeconomic Modelling and Forecasting