Britain’s economy is slumping under the coronavirus-induced crisis in May, concerning chances of rebound and sending a signal of needing more government help in boosting recovery. Britain's GDP rose 1.8% after the lockdown slightly eased, the Office for National Statistics data showed. This showed a lighter rebound than initially predicted by economists in a media poll after a record-contraction of 20.3% in the month of April, right at the peak of the outbreak.
The activities in the services sector also missed the initial expectation, underlining doubts in whether Britain’s on the right path to a V-shaped curve bounceback or undergo a rougher outlook after the restriction is gradually eased. As the recent figures highlighting the near future challenge, finance minister Rishi Sunak noticed that the uncertainties about the security of income and jobs are looming, and announced a 30 billion pounds ($38 billion) extra stimulus to limit unemployment rate increase last week. However, the temporary government support will be terminated between the month of August-October, and 9 million jobs supported will be at risk, as Bank of England warned recently about the upcoming rise of unemployment numbers.
The coronavirus outbreak has taken more than 44,000 deaths in Britain, marking the Europe’s highest death toll, and with a risk of a second wave of infections a new round of lockdowns will derail the kingdom’s further recovery. Britain’s government closed non-essential business on March 23, after the closure order of cinemas, restaurants and bars was imposed.
Head of economics at the British Chambers of Commerce, Suren Thiru opined that further considerable fiscal stimulus is needed to help boost a sustained recovery, and the output pick-up in May was partly a pent-up let-off in demand as lockdown was loosen, not a part of genuine recovery.
Over March and April, the slumping reached a record 25.9%, more than previous forecast, and May output was 24.0% lower in year-on-year comparison. IMF forecast last month shows a shrink by more than 10%, a historic decline for the country though it’s still smaller than Italy and France’s prediction. The optimism of V-shaped recovery curves are fading, leaving something more like W-shaped curves showing series of relapses and improvements before constantly up to recovery.
May’s rebound which was way lower than economists forecasts, driven solely by 0.9% growth in the service sector, had weakness in commercial property, professional services, computer programming, arts and entertainment. After being the-further-drags in April, the retail and wholesale sector are the biggest growth contributors in May. Construction and industrial output also had strong recovery, aligned with the previous forecasts after slumping in April.
May’s data only provides a limited pointer to recover the economy, as significant lockdown relaxations for restaurants and shops in England only started in June and July.
Data of the private sector showed recovery indication in May and June, as lockdown measures were loosening further. June spending was increased by 3.4%, compared year-on-year, according to The British Retail Consortium data announced on Tuesday, July 14.
