The UK economy is on the brink of a double-dip recession
Official figures show that the UK economy shrank 2.6% in November due to an increase in coronavirus infections and fresh restrictions. The lockdowns put a heavy burden on the economy, setting it on track for a double-dip recession.
November’s drop was considerably lower than the 5.7% contraction economists predicted in a Reuters poll, but the dip implies that the economy is 8.5% smaller than it was in February 2020, having been 6.1% smaller in October, the Office for National Statistics said.
The government hopes the vaccine roll-out will help improve the economy
The UK government is focused on rolling out coronavirus vaccines hoping it will allow the economy’s growth to bounce back in the spring.
The UK economy shrank at a record pace of roughly 20% in the second quarter of the year, before growing by around 16% in the following three months.
The 2.6% contraction in November, happened when England was placed into a month-long lockdown, followed by an expansion of just 0.6% in October. Britain’s important services sector shrank 3.4% in November, the office for national statistics reported, but the production sector contracted just 0.1%.
This puts the UK on track for a double-dip recession—with the economy predicted to fall into a sustained period of contraction after returning to growth in the third quarter of 2020.
New coronavirus mutant putting strain on the UK economy
Coronavirus cases have soared in recent weeks, due to a new, more infectious variant. More than 370,000 people tested positive in the last seven days, while more than 7,500 people died, up 50% from the previous week.
Chancellor Rishi Sunak while commenting on the economy said: “It’s clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face.
‘But there are reasons to be hopeful. Our vaccine’s roll-out is well underway and through our plan for jobs, we’re creating new opportunities for those most in need.’