Surprise, surprise we officially entered recesssion in Quarter 2 of 2020 , BUT we also exited it in the same quarter.
That's why it is the Hokey Cokey Recession !
Whist the enforced Lockdown has undoubtefdly inflicted serious damage to the economy which will take several years to put right, there are some encouraging aspects to this news & need for perspectives before we all wallow in doom rather than pick ourselves up & get on the front foot.
- GDP fell in March & April but growth returned in May, so the recovery has already been going longer than the recession
- This is the shortest recession on record
- The economy had already recovered a third of its lost ground by the end of June
- The recovery so far officially recorded has had NIL contribution from the hospitality sector which has only started to get going with Rockstar Sunak's subsidised meal scheme
- The UK suffered the worst Quarter 2 GDP decline across Europe because it locked down later than elsewhere, thereby concentrating decline in this Quarter: taking the first half as a whole Spain suffered the worst decline at 22.7% versus the UK's 22.1%
- The UKs economy is more service industry orientated than other Europen countries making it more vulnerable to a Lockdown
Having put matters in a better perspective, the pace & momentum of the economic recovery in the UK, now depends on a consistent polital message & getting people back to work, with eventually the abolition of self distancing which has eroded public confidence so badly, & then the Holy Grail of a vaccine.
In amogst the pain of recessions it is important to realise that they fulfil an important role in eliminating the froth of the previous boom, & in time re-allocating resources more approrpriately: this recession will be no different & is already acclerating the trends of for example:
- The move from the Retail High Street to Online
- Eliminating the estimated 30% of over capacity in Restaurants
- Nailling the walking wounded Zombie businesses that have been struggling for years: Debenhams looks likely to be liquidated after two Administations in the last 12 months