Home   Kent   News   Article

UK Recession: As GDP falls by 20% this is what it means for Kent


More news, no ads

LEARN MORE

Britain's economy took a plunge during the coronavirus lockdown, pushing the country into the largest recession on record.

The effects of the pandemic have caused the economy to drop by 20.4% between April and June, after non-essential businesses and services were forced to close in efforts to slow the spread of Covid-19.

The pandemic has sent the UK into the largest recession on record
The pandemic has sent the UK into the largest recession on record

It marks the first time the UK has entered a recession since 2009, and confirmed by the The Office for National Statistics (ONS) this morning.

But what does it mean for Kent?

What is a recession?

The health of the nation's economy is measured by its gross domestic product (GDP), which is the total value of all the goods and services provided by the nation's firms and businesses.

Under normal circumstances there tends to be a gradual rise in GDP each financial quarter, which indicates the economy is healthy.

But seismic national events can knock this off course, instead resulting in GDP falling.

When GDP continues to fall for two consecutive quarters, economists refer to it as a recession.

Why is it the worst recession on record?

This one is of an unprecedented scale, but it's a situation predicted by many financial forecasters after the almost complete shut down of local businesses during the lockdown.

Companies which would normally generate large streams of revenue were forced to close their offices and shops, and the government responded with their furlough and coronavirus job retention scheme, which helped employers across the country retain employees by footing the bill for 80% of their wages up to £2,500 per month.

Recovery from the recession may be slowed down by a lack of consumer spending
Recovery from the recession may be slowed down by a lack of consumer spending

The last time the country saw a double digit drop like this was the Great Depression in the aftermath of the First World War, but this new recession comfortably eclipses it.

How quickly will we recover?

Chris Britcher, business editor for the KM Group, said: "Although the news is bleak, the reality is that the economy was on a strong footing prior to the pandemic.

"So providing there is no return of major lockdown measures, we should see gradual month on month growth."

Monthly figures showed the economy bounced back by a slightly better-than-expected 8.7% in June, following upwardly revised growth of 2.4% in May, as lockdown restrictions eased.

But it is unlikely to recover quickly.

Jo James, chief executive of Kent Invicta Chamber of Commerce, is predicting a slow-burn return to health for the UK.

She said: "With restrictions steadily easing, the second quarter is likely to prove to be the low point for the UK economy. However, the prospect of a swift ‘V-shaped’ recovery remains remote as the recent gains in output may fade over the coming months as the economic damage caused by the pandemic increasingly weighs on activity, particularly as the government support measures wind down.

"Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy.

"This should include supporting businesses to retain staff through a cut in employer national insurance contributions and targeted support to help businesses placed under local lockdowns."

"Bold action is needed to immediately inject confidence back into the UK economy..."

How will Kent's businesses be affected?

Chris Britcher said: "The lockdown has come at a huge cost for the county, and we can expect to see the impact for months to come.

"Although many businesses may have successfully weathered the shut down, a continued low demand for services may mean they continue to struggle.

"And of course everyone is going to be tightening their purse strings because of the uncertainty it all brings, most noticeably when it comes to job security."

The county is dependent on consumer spending, so lack of demand from shoppers and fear for keeping their jobs could significant slow the recovery of the economy.

Business expert Richard Scase previously predicted that respect for Covid guidelines would help the county weather the effects of a recession
Business expert Richard Scase previously predicted that respect for Covid guidelines would help the county weather the effects of a recession

Speaking to KentOnline in July, business expert Professor Richard Scase predicted the future health of the county's economy would rely on people following the government's Covid-19 guidelines.

He said: "What will be key in this revival will be the respect for social distancing measures.

"These will be vital for the revival of the retail, leisure and hospitality sectors."

Read more: All the latest news from Kent

Close This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.Learn More