UK OFFICIALLY in recession after plunging by shocking 20.4%

Rishi Sunak warned of a looming jobs catastrophe today as it was revealed the British economy plunged by more than a fifth at the height of the coronavirus outbreak.

Figures showed UK plc shrank by a shocking 20.4 per cent in the three months to June, the biggest fall in modern history, with record reductions in construction, services and production. 

The news means the country is officially in recession, which is defined by two consecutive negative quarters. 

The economy dipped 2.2 per cent in the first three months of the year, and is now smaller than it has been since 2003. 

However, there was a glimmer of hope with the single month GDP figure for June bouncing back by 8.7 per cent as lockdown restrictions eased.

The Chancellor said the tumble showed that ‘hard times are here’ and warned many more jobs will be lost.

‘I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here,’ he said. 

‘Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.

‘But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity.’ 

Boris Johnson has already warned that the country is in for a ‘bumpy’ ride, but insisted the government is ready to make ‘colossal’ investments in the future. 

Office for National Statistics spokesman Jonathan Athow said: ‘The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

‘The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

‘Overall, productivity saw its largest fall in the second quarter since the three-day week. Hospitality was worst hit, with productivity in that industry falling by three quarters in recent months.’  

The plummet is roughly in line with the Bank of England’s predictions. 

The grim picture emerged after figures yesterday showed that the number of people on company payrolls had fallen by 730,000 since lockdown –  with employment seeing the biggest drop in a decade. 

In the three months to June, the number in work decreased by 220,000 – the largest quarterly slump since 2009. Total hours worked slumped by a fifth over the quarter to the lowest level since 1994.

Meanwhile, the numbers on payroll tumbled another 114,000 in July, as the claimant count – which includes some people who are in work – increased again to reach 2.7million. 

Underlining the misery, store chain Debenhams has announced that it is cutting 2,500 roles. 

However, analysts warned the grim news is the tip of the iceberg, as the full effects of lockdown have so far been masked by the government’s massive support schemes. 

Some 9.6million jobs have been furloughed, with the Treasury paying out £33.8billion in subsidies. 

Many people appear to have chosen to stay economically ‘inactive’ rather than hunt for work – meaning they remain outside the headline unemployment figures.

The Bank of England’s latest forecast says the economy will shrink by 9.5 per cent this year, making it the worst downturn in a century, and unemployment will rise by a million.