First time in 11 years, UK is in recession

As the United Kingdom was officially pushed into recession, the economy of the country suffered the biggest slump on record between the months of April and June because of the lockdown measures. Compared to the first three months of the year, the economy of the country shrank as much as 20.4 percent. The crisis has a very huge effect on the trading world in the country as well, almost all the traders in the country saw some type of losses.

As the regulations ordered the shops to be closed, household spending also plunged, and the factory and construction output fell very hard. Since 2009, it was the first time the UK was pushed into its first technical recession, defined as two consecutive quarters of economic decline.

According to the chancellor Rishi Sunak, the situation for the UK is very tough. Rishi noted that the government is grappling with something that is unprecedented and that it is a very hard and uncertain time for both, the country and the world as well.

On the other hand, shadow chancellor Anneliese Dodds blamed the PM Boris Johnson for the sake of the economic decline, as Dodds said, a downturn was inevitable after lockdown, but Johnson’s jobs crisis was not.

Generally, recession is directly seen through consumer confidence. Based on how the experts explained the consumer confidence index, it is very much likely that the recession will continue well into the future if something is not changed right now. Many experts are saying that at this point it is very hard to say what the future can bring, but one thing is clear, the financial market around the world is facing huge challenges.

How did the crisis affect the London Stock exchange and trading market in general?

The financial sector of the country was hit very hard by the virus. For many days, the stock has been closed because of the situation that the country was in. The prices of the stocks fell very hard, and the UK saw a huge loss.

According to the study of Axiory, one of the leading brokers on the market, traders were affected by the virus as well. As the data shows, most of the traders lost a lot of investments and most of them were very confused because it was almost impossible to tell what would happen.

Could the situation change any time soon?

According to the study of the Office of the National Statistics, ONS, the economy has actually bounced back in June as some restrictions were lifted.

When it comes to growth, on a month-on-month basis, the economy actually grew by 8.7 percent in June, compared to the 1,8 percent growth of May. However, the deputy national statistician for economic statistics, Jonathan Athow noted that the GDP in June still remained to be a sixth below its level in February, before the virus spread in the country.

During this crisis, the biggest collapse in output was influenced by the closure of shots, hotels, restaurants, stools, and car repair shops. However, according to the official statistics, it was the services sector that suffered the biggest quarterly decline in the market. In addition, because of the shutdown of factories, this year, there was the slowest car production in history, since 1954.

What about other countries?

Among the most advanced economies, the slump of the United Kingdom stands to be one of the biggest. As of now, the economy of the country is more than the fifth smaller than it was at the end of the last year. This is not as bad as the 22.7 percent decline in Spain, but it is almost twice the size especially compared to the US and Germany.

Also, according to the chancellor, the economy of the UK actually performed a lot worse than its EU counterparts because it was generally focused on services, hospitality, and consumer spending.

However, the Covid-19 had a huge impact on the global economy. According to the official data, because of the lockdowns around the world, the pandemic caused the largest global recession in the history, as the official data says, more than a third of the global population was placed on lockdown.

Due to a significant rise in the number of Coronavirus cases, the global stock Martens fell very hard in late February and early March. Since the 2008 financial crisis, the stock markets saw the largest single-week declines, and in March, the stock markets crashed, with falls of several percent in the world’s major indices.

As of now, the world is preparing for the second wave of the coronavirus, but it is very hard to say what could happen in the next few months.