The UK economy is the hardest-hit in Europe by COVID-19 – suffering a record 20.4% drop in Gross Domestic Product since the pandemic began. According to the Office for National Statistics, the shock figures result from the government’s efforts to contain the virus during lockdown.
Representing the biggest drop ever recorded in Britain (almost ten times bigger than the steepest decline pre-coronavirus), the GDP’s slump includes a fall of 24.3% in manufacturing, 19% in services and a massive 40.1% in construction since March. It comes after a drop of only 5.8% in March.
The ONS says almost every sector has fared badly, as the lockdown has “dramatically reduced economic activity” since 23rd March. The hardest-hit sectors were pubs, car sales, health, education, construction, manufacturing and housebuilding.
© rommma / Shutterstock.com
UK “worst-hit” by COVID-19
The average drop in GDP for Europe is 10.2%, including a slump in the construction sector of only 14.6%, compared with the UK’s figure of 40.1% in the same industry. These figures have been verified by the International Monetary Fund, which describes the pandemic as having a “significant impact” on the economy across Europe.
Global trade has also been badly affected in the UK, with large drops in both the export and import of cars, fuels and clothing worldwide.
According to the Johns Hopkins Coronavirus Resource Centre, the UK has been the worst-hit country in Europe in terms of fatalities, with COVID-19 accounting for more than 43,000 deaths and around 307,000 COVID-19 cases. This compares unfavourably with France, where there have been 161,000 cases and 29,700 deaths and Italy, where there have been 239,000 cases and 34,000 deaths. Italy was once believed to be the centre of coronavirus infections in Europe, but it was brought under control relatively quickly and subsequently overtaken by the UK.
A long road to economic recovery
Analysts say it will be a long and slow road to recovery for the economy, which has left people fearing for their jobs. When the lockdown began in March, the government introduced a furlough scheme, whereby employees who couldn’t work due to the pandemic were assured 80% of their wages as part of the Coronavirus Job Retention Scheme.
The government has just announced changes to the furlough scheme to reflect the gradual easing of the lockdown and more people returning to work. The scheme will change from 1st July, so employers wishing to make a claim for staff in July can’t do so before this date.
Furlough scheme winding down
Employers can bring furloughed employees back to work from 1st July onwards for any amount of time and any shifts, while still claiming CJRS grants for hours not worked. The level of grant will be gradually reduced from 1st August, on a monthly basis – there is a cap of £2,500 per month on the wages of furloughed staff.
Under the changes, an employee will be entitled to 60% of the £2,500 cap if they are on furlough for 60% of their normal hours. The scheme is due to close altogether on 31st October 2020.
Job loss risks
Analysts say the future of the British economy is challenging. After the lockdown was announced, 25% of UK businesses ceased trading temporarily, equating to more than 1.4 million companies. An estimated 56,000 have ended up closing permanently. Of the businesses who stayed open, 40% have had their income reduced significantly and employees’ jobs are by no means assured.
Economic analysts at the University of Essex estimate a total of 6.5 million UK jobs could be lost as a result of fallout from the pandemic and lockdown as a recession sets in. The study estimates most job losses will occur in the accommodation, food and hospitality services sectors.
A study by the Office of National Statistics suggested the figure could rise to 7.6 million jobs or 24% of the British workforce. Regions with the biggest number of low-paid jobs are at greater risk, according to the research.
Low pay jobs “high risk”
Nearly 50% of all the at-risk jobs are in occupations where the pay is minimum wage up to £10 per hour. The average hourly pay in the UK is £13.30, so the regions with the lowest income, where jobs are most at risk, are said to be coastal resorts, where there’s a heavy reliance on seasonal employment.
Unfortunately, nobody’s job is secure, as it’s impossible to predict exactly how long the pandemic will continue, or whether there may be a second spike later in the year – something health chiefs haven’t agreed on at present.
Here to help
When you’re seeking a temporary solution to financial problems caused by the COVID-19 lockdown, Logbook Loans 247 offers services to provide you with a short-term loan for your car.
We are a responsible lender, that will give you a fair price, offering sports cars logbook loans, vintage and classic car logbook loans, vans logbook loans and more. Please contact us today for further details of our services.