June 22, 2024

Paull Ank Ford

Business Think different

How could a UK recession affect me?

However, we are also already out of recession. GDP fell in March and April, then returned to weak growth in May as businesses began to reopen, and strong growth in June as the recovery really got underway.

It takes time for the data to be added up, and the ‘official’ definition of a recession really works best when looking at a normal business cycle, not the new world of a lockdown in which entire industries are switched off overnight.

Now they have been switched back on again, GDP jumped by 8.7pc in June and around one-third of the hit has been reversed so far.

It still means there is a big hole in the numbers. The economy’s output in June was barely bigger than during the worst months of the financial crisis.

But with the hospitality industry reopening in July, which is in the third quarter and so not seen in the official figures yet, the recovery should keep on going.

Compared to the gloomiest forecasts, even the dire number for the second quarter is something of a relief. The Office for Budget Responsibility said that a three-month lockdown could trash GDP by one-third, so a fall of a fifth shows the restoration of some life as normal.

Which industries are hardest hit?

Each business and industry felt this recession differently. The recovery is very variable too.

Some people have been able to work from home throughout, plugging in a laptop and carrying on almost as normal. Others could do nothing – hairdressers, for instance, or some factory production line workers – but are now back to work.

Others still are trapped with nothing, such as bowling alleys, which are still shut.

Over the second quarter as a whole, accommodation and food services were hit hardest.

With pubs and restaurants closed, or reduced to a takeaway-only service, and hotels barred from taking guests, the vast majority of their business evaporated.

Output fell by 86.7pc for that unfortunate industry.