British economy groans under lockdown

In May, the British economy was barely able to recover from the previous sharp slump. Around a quarter of economic output was lost in March and April due to the corona restrictions. With a mini-plus of 1.8 per cent, only a fraction of the losses could be made up in May – despite initial easing that had been in force since the middle of the month. This means that Great Britain, along with Italy and Spain, continues to be one of the European countries that have to cope with the highest economic losses due to the corona crisis.

Industry and the construction sector were still the main beneficiaries of the fact that the population was no longer encouraged to stay at home from mid-May onwards. The construction industry grew by 8.2 per cent in a month-on-month comparison, but had also almost halved in the previous two months. At the same time, industry increased production by no less than six percent. The possibility of offering take-away service had a slightly positive effect on the catering trade. However, the sector had previously come to a virtual standstill. Only the openings at the beginning of July will probably help the sector halfway back on its feet. Only online trading was booming, which benefited the wholesale and retail trade. By contrast, the entertainment industry and the heavyweight real estate sector, which suffered from a strict ban on viewing, continued their downward trend in May.

The British economy probably left the low point of the slump behind in May, but it did not do much more than bottom out. This suggests that the UK’s economic output will suffer a particularly sharp slump in the second quarter, which could even amount to more than 20 per cent quarter-on-quarter. This is a lot, even compared to the European countries most severely affected by the pandemic, Italy, Spain and France. A double-digit decline of around 12 percent is also expected for 2020 as a whole.

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