View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Politics
  2. Economy
12 August 2020

The UK suffers the worst recession of any G7 country

Britain has now recorded the largest fall in GDP of any major country as well as the highest excess death rate in Europe. 

By George Eaton

The UK’s performance during the Covid-19 crisis has been confirmed as world-beating – but in the worst sense possible. Today’s release from the Office for National Statistics shows not only that Britain has entered the deepest recession in its history, but also that it has suffered the worst recession of any G7 country. 

GDP contracted by 20.4 per cent in the second quarter of this year (April to June 2020), compared to -13.8 per cent in France, -12.4 per cent in Italy, -12.0 per cent in Canada, -10.1 per cent in Germany, -9.5 per cent in the US and -7.6 per cent in Japan. 

Boris Johnson’s government imposed the lockdown late partly in an attempt to protect the economy. But in the event, it has achieved the worst of both worlds. The UK has suffered the highest excess death rate in Europe (with 65,000 deaths) and the deepest recession. And the two are not coincidental: by causing a surge in deaths, the calamitously late lockdown helped destroy economic confidence. The stringent measures that were belatedly imposed – and that choked off growth – endured for longer than elsewhere because the virus had already spread so widely. 

The UK has seen the largest drop in GDP out of all G7 countries

GDP cumulative growth from Q4 2019 to Q2 2020
The UK has seen the largest drop in GDP out of all G7 countries
Source: OECD. Japan figures are estimates.

[see also: The UK’s plummeting GDP cannot be saved simply by lifting lockdown]

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

The ONS report shows that UK GDP rose by 8.7 per cent in June, but it would be reckless for the government to assume that the UK will enjoy a sustained “V-shaped recovery”. GDP remains 17.2 per cent smaller than it was in February and a second wave of Covid-19 is looming. Meanwhile, the unwinding of the furlough scheme threatens mass unemployment of the kind the UK last endured in the 1980s. 

Faced with this, Chancellor Rishi Sunak is wisely prepared to delay his planned autumn Budget, at which he hopes to announce tax rises and spending cuts. But it was always reckless to plan for austerity when stimulus is required. 

Though government borrowing has rarely been higher – the national debt has reached 100 per cent of GDP – it has also rarely been cheaper. Indeed, such is the demand for UK debt from investors that the government has sold bonds at negative interest rates. In other words, investors are paying the British government to take their money.

The reason is that there are few safer havens than UK bonds. Unlike the eurozone countries, Britain retains its own currency and the ultimate magic money tree: the Bank of England. The central bank has already taken the emergency step of creating (or “printing”) new money in order to directly finance government spending. In such circumstances, there is no need for the government to deny essential support for living standards and public services. As JM Keynes was fond of remarking, look after unemployment and the Budget will look after itself.

[see also: The coronavirus crisis shows we need an entirely new economic system]

But by far the greatest stimulus that any government can provide is an effective strategy to prevent the spread of Covid-19. That is what Johnson’s government lacked at the start of the pandemic and, as schools and the economy reopen, what it so desperately needs now.

Britain has the worst excess mortality rate in Europe

Excess deaths per 100,000 compared to previous years, recorded since the first 50 Covid-19 deaths
Britain has the worst excess mortality rate in Europe
Source: The Economist. Only includes contries where excess mortality data is available.

Content from our partners
Development finance reform: the key to climate action
Individually rare, collectively common – how do we transform the lives of people with rare diseases?
Future proofing the NHS

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU