August 2020 GDP Tracker

GDP picking up after recession confirmed

Main points

• Latest ONS estimates published this morning show that the UK economy contracted by 20.4 per cent in the second quarter of 2020, thereby confirming the UK’s first recession since the global financial crisis. This outturn is largely in line with what we had forecast last month (figure 1).
• Further estimates suggest that the economy grew by 8.7 per cent in June itself.
• The outlook for the third quarter of 2020 is for growth of about 15 per cent as the economy reopens, on the assumption that Covid-19 remains contained.  This would still leave GDP in September around 10 per cent lower than in February

“Today’s ONS estimates suggest that GDP fell by a record 20.4 per cent in the second quarter of 2020, following a decline of 2.2 per cent in the first quarter of the year, thereby confirming the UK’s first recession since the financial crash. However, the monthly estimate for June suggests a rebound of 8.7 per cent, reflecting further easing of Covid-19 lockdown measures – though it remains a sixth below its level in February. Despite the recovery noted in June, the path ahead remains precarious. An extended period of growth will be required to make up the ground lost in recent months”

Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting

You can read the full forecast here