The chancellor has said it is “very likely” the UK is in a “significant recession”, as figures show the economy contracting at the fastest pace since the financial crisis. The economy shrank by 2% in the first three months of 2020, as coronavirus forced the country into lockdown. Markus Kuger, Chief Economist at commercial data and analytics firm, Dun & Bradstreet said: “Today’s confirmation of a 2% contraction of real GDP growth in the first quarter of 2020 is the sharpest drop we’ve seen since the global financial crisis in 2008. Although UK figures for Q1 are not as extreme as the eurozone contraction (where GDP fell by almost 4%), Q2 figures are expected to show continued contraction as the UK lockdown was implemented slightly later than in other European countries. The data released today shows that the UK economy shrank by 5.8% in March, and the impact of COVID-19 on the economy is likely to increase significantly in April and throughout Q2.
“The Federation of Small Businesses has also confirmed today that 40% of small businesses have closed due to the pandemic, with a third of those considering redundancies and unsure if they will reopen at all. Smaller businesses make up over 99% of private businesses in the UK and a rise in unemployment and business failures will put further strain on the economy as businesses struggle to recover.
“Taking into account faltering growth, higher unemployment rates, disrupted supply chains and an anticipated rise in credit risks, Dun & Bradstreet has downgraded the UK’s country risk rating to a new all-time low, and moved the UK from ‘low risk’ to the ‘medium risk’ category. Our analysis has also resulted in a ‘deteriorating rapidly’ outlook for the UK with further downgrades likely in the months ahead.”