The UK economy is suffering the worst quarterly decline since 1979 – TV channels

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A sign painted on the ground reminds people to practice social distancing as a pre-regulation against the spread of COVID-19 in the center of Leicester, central England, June 29, 2020. – The central English city of Leicester may be the country's first to face a local because of an increase in coronavirus cases, UK Home Secretary Priti Patel said on June 28. Ben STANSALL / AFP.

The UK economy has suffered its biggest quarterly contraction for more than 40 years as the coronavirus pandemic slowed down activity, revised official data showed on Tuesday.

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Gross domestic product shrunk 2.2 percent in the first quarter, or the January-March period, compared to the previous three months, the Office for National Statistics said in a statement that provided another estimate.

The original figure provided by the ONS showed a 2.0 per cent GDP contraction in the first quarter, or the worst since the global financial crisis in 2008.

Second quarter data will show the full impact of coronavirus because the UK's nationwide coronavirus lockondown was first imposed on March 23.

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Recent official figures had shown that Britain's economic activity crashed by a record high of 20.4 per cent in April.

"Our more detailed picture of the economy in the first quarter showed … the largest quarterly decline since (third quarter of 1979)," said ONS deputy national statistics officer Jonathan Athow.

"All major sectors of the economy shrank significantly in March as the effects of the pandemic hit."

However, Athow added that "the sharp fall in consumer spending at the end of March led to a significant increase in household savings".

This has been further aided by the fact that the government paid most of the wages in the private sector during the pandemic to keep them working.

Economists, meanwhile, expect a double-digit decline in output during the second quarter or April-June period, placing the UK in a technical recession.

"It is clear that the UK economy witnessed second quarter GDP recruitment," said Howard Archer, economist at EY, which forecasts a 17 percent decline before a 10 percent rebound in the third quarter.

The Bank of England has warned that paralysis of COVID-19 could awaken the nation's worst recession for centuries, after the coronavirus narrowed its economies worldwide.

Earlier this month, BoE unveiled another £ 100 billion ($ 126 billion, $ 112 billion) cash incentive to support Britain's coronavirus-affected economy.

It had already responded by reducing the main interest rate to a record low of 0.1 percent and pumping £ 200 billion into the economy to get loans to private banks for fragile businesses.

AFP

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