The figures, supplied by the Office for National Statistics, show this is the biggest fall since records began in 1997. The UK has one of the worst coronavirus death tolls in the world, and has taken a crushing economic hit.
Meanwhile, global markets continued to fall.
Last night, the Dow Jones Industrial Average closed down 6.9 percent, the S&P 500 lost 5.89 percent, while the Nasdaq Composite dropped 5.27 percent.
Europe’s broad FTSEurofirst 300 index went down 4.11 percent whilst Singapore’s Straits Times Index went down 3.4 percent.
Elsewhere in Asia, Japan’s Nikkei went down 2.8 percent, Hong Kong’s Hang Seng Index lost 2.3 percent, the Shanghai Composite Index lost 0.8 percent, Australia’s S&P/ASX 200 index plunged 3.1 percent whilst South Korea’s Kospi dropped 0.9 percent.
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7.32am update: Economists react to GDP
Jeremy Thomson Cook, Chief Economist at Equals said: “It’s not a surprise that record declines in economic activity occurred when most UK businesses had people working from home or on furlough. The 20 percent fall is a shocking figure nonetheless, but gives us a good idea of how deep the trough is that the UK economy needs to make its way out of in the coming quarters”
“UK GDP has fallen down the lift shaft and will now have to take the stairs – a much slower and more labour intensive process – back up to recover.”
“With a Brexit showdown in the coming fortnight, we can but hope that today’s numbers focus a few minds in to providing an extension to the current transition period so as to relieve businesses from fighting two of their largest ever battles concurrently.”
Andrea Olivari, Co-Founder at digital lender Selina Finance said: “These figures reflect this week’s stark warning from the OECD about the contraction of the UK economy. However, with the lockdown easing and both the hospitality and retail sectors re-opening and, keeping in mind, of course, all the Government measures to support business and workers, there’s tentative hope we could see a U-shaped recovery.”
5.40am update: Steve Mnuchin warning
Fears of a second coronavirus wave are thought to have contributed to Thursday’s fall in the markets.
But US Treasury Secretary Steve Mnuchin told CNBC that the country could not shut down the economy again if a second wave hit: “We can’t shut down the economy again. I think we have learned that if you shut down the economy you’re going to create more damage, and not just economic damage.
“There are other areas of medical problems and everything else that gets put on hold.
“I’d say the good news is plenty of hospital capacity, a lot of progress on testing. I think we’re over 20 million people that have been tested and will continue to test people and that was something that was the big problem and the reason why the president needed to close down parts of the economy.
“We have the fed program, we have Main Street, which is going to be now up and running, and we’re prepared to go back to Congress for more money to support the American workers. We’re going to get everybody back to work. That’s my number one job working with the president.”
Additional reporting from Gursimran Hans
Published at Fri, 12 Jun 2020 04:41:00 +0000