Official figures this morning have confirmed that the UK economy has contracted at the fastest rate since the financial crisis in 2008. Back when Lehman Brothers collapsed and millions were made unemployed by the bubble of financial products popping, the economy shrank around 2.5%, which is just over this morning’s reading of 2%. The worst reading from this morning’s data, however, shows that the UK contracted by 5.8% for March. This is the worst one month drop since records began more than 20 years ago.
Despite the very steep slump in economic activity, the Pound has recovered slightly from yesterday’s sell-off which saw the charts show weekly lows against a host of currencies. This is because analysts had expected a 2.6% drop in economic activity over the last quarter, so today’s number is a look on the slightly brighter side. This pretty much spells out the obvious for the UK and global economy that we are currently in a recession, and official figures will show that after two consecutive negative quarters of growth.
After UK Prime Minister Boris Johnson’s speech to address the nation on Sunday, people in England can now start to return to work where safe to do so, move home and spend more time outside of the house per day. This is part of the staged process of getting the economy back up and running, to a normal level of functionality.
Since global lockdown measures have been put in place, it has always been a race to see which country could return their population to work and continue life as what it was pre-virus. The government hopes this plan to partially release lockdown will avoid a second, and potentially, catastrophic wave. Hopefully the results will pay off and the Pound can gain some momentum behind it.
Have a good day.
Author: Jack Nicholls, Relationship Manager
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