Britain found itself in the middle of a recession, following the Covid-19 pandemic of 2020. Amid numerous business closures, the latest announcement came from Natwest Bank, which on 12 August reported it will cut 500 jobs to cut costs.
A City analyst told Sputnik that although the GDP number has been unprecedented in the recent history of UK, having sunk 20.4 percent in Q2 of 2020 - the major factor was the complete shutdown of the economy in March and April.
Our latest GDP estimates for June show that the UK economy is now 17.2% smaller than it was in February before the full impacts of the #coronavirus #COVID19 pandemic hit https://t.co/8FmcVvX6lz pic.twitter.com/Qgh12prPtt— Office for National Statistics (ONS) (@ONS) August 12, 2020
Since April, the services sector (June), the hospitality sector (July) and the “eat out to help out” move (August) have kicked off which would have a positive impact on the economy, he explained.
In regards to government plan - going forward - fiscal support is anticipated in autumn, and the Bank of England is expected to proceed with further Quantitative Easing (QE).
“This means, interest rates will fall lower and risky assets such as stock will be supported. In this way, borrowing will become cheaper and people will be pushed into spending as the depository rates are extremely low for saving. Furthermore, there are talks about the central bank cutting interest rates further Q1 2021 by 0.1% bringing the official rate to 0%,” the expert said.
The UK has been hit hard by the coronavirus pandemic, with the highest death toll in Europe registered in Britain, mounting to 46,611 deaths. As a result of businesses shutting down during the lockdown, "hundreds of thousands of people have already lost their jobs,” as per the UK Chancellor of the Exchequer Rishi Sunak.
“…and sadly many more will," Sunak added.
“Overall the economy will pick up gradually however on a year-on-year basis, we do expect a decrease in growth going forward. If UK experiences another virus outbreak, given Brexit looming and the fragile economy, there are low probabilities for a complete shut down again,” the City analyst told Sputnik, signalling hope for growth in the UK economic development.