UK facing ‘significant recession’, chancellor warns

Chancellor Rishi Sunak has warned that it is “very likely the UK is facing a significant recession this year”.

The chancellor’s bleak prediction comes as newly published figures show that the economy shrank by 2% in the three months to the end of March - the “biggest contraction since the end of 2008”, says the BBC.

Speaking to Sky News, Sunak said: “Technically, a recession is defined as two quarters of negative GDP, we’ve now had one… so yes, it is now very likely that the UK is facing a significant recession at the moment and this year.”

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According to the Office for National Statistics (ONS), the country’s GDP fell by 5.8% in March - the biggest monthly fall on record - as the coronavirus lockdown took its toll.

The ONS said: “The impacts of the coronavirus were seen right across the economy, with nearly all sub-sectors falling in the three months to March.”

Underlining the extent of the crisis, a survey of more than 5,000 companies by the Federation of Small Businesses (FSB) suggests that one in three firms may not reopen after the lockdown is lifted, reports The Times.

FSB chair Kirsty McGregor said: “Businesses will not simply be able to pick up where they left off.”

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BBC economics editor Faisal Islam agrees that the “much hoped-for sharp bounceback… is looking far from certain”.

Sky News’s economics editor Ed Conway notes that other European countries which locked down earlier - such as Italy, Spain and France - “have seen far bigger contractions in the first quarter”.

“But in much the same way, the UK is expected to see a far sharper decline in the second quarter of the year - the one we’re in at the moment,” he adds.