Like all Western countries, the UK experienced a dramatic drop in GDP in the second quarter, albeit slightly better than expected by -20.4%.
However, the -19.8% is a figure that has rarely been seen in British history. There have been no double-digit falls in GDP since 1960, just to be clear. The annual one was also sharply hit. The annual figure, with -21.5%, could only reflect the quarterly figure
Gross fixed investments decreased less than initially expected (-21.6% against -25.5%), while both household consumption (-23.6% against -23.1%) and public expenditure (- 14.6% versus -14%) fell more. Private consumption accounted for more than three-quarters of the decline in GDP, reflecting the implementation of public health restrictions, mandatory closures of non-essential shops and forms of social distancing. Net foreign demand contributed positively as imports (-22.7%) fell more than exports (-11%), causing the net trade balance to improve despite everything.
But the UK's problem is the future. The third quarter expected a strong rebound, with + 14%, as indicated by analysts:
We must ask ourselves at this point, however, how realistic this data can be in view of a new wave of Lockdown, which is imposing itself in the United Kingdom due to the second wave of Covid-19. If this growth were not consistent, we would have a truly frightening figure at the end of the year, and, above all, we would see an unprecedented explosion in unemployment with the growth of social and racial tensions that never completely disappeared. How will it be possible to bring the economy back on a path of stable growth?
This will be Boris Johnson's real challenge once the Brexit problem is solved.
The UK GDP article : DRAMATIC CRASH IN THE SECOND QUARTER, BUT THE UNCOGNITE ARE ON THE THIRD comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/pil-del-regno-unito-crollo-drammatico-nel-secondo-trimestre-ma-le-incognite-sono-sul-terzo/ on Wed, 30 Sep 2020 08:45:34 +0000.