2020 Recession Official

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 

 

 

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