Twice as bad as the US. Ten times worse than anything seen during the financial crash of the late 2000s. Worse than any EU country. The UK is planted firmly at the bottom of the Covid-19 developed country league table after the economy contracted by a fifth in the second quarter of 2020.
The reasons Britain is once again being dubbed by some “the sick man of Europe” are pretty clear. After weeks of dithering, the government imposed a stringent lockdown that was tougher and lasted for longer than elsewhere. Allowing the virus to spread to care homes meant the reopening of bits of the economy was slow.
Boris Johnson and his ministers cannot be blamed for the arrival of a global pandemic. What will be an issue at the inevitable inquiry into why Britain had more deaths and suffered a bigger hit to growth than its rivals is the extent to which government mistakes intensified the crisis.
The latest data from the Office for National Statistics shows how the economy has evolved since the start of the year. Activity started to fall in the last 10 days of March before coming to a virtual halt in April. There was a modest pick-up of 2.4% in May followed by a more substantial 8.7% rise in June.
This sounds impressive but as Samuel Tombs of Pantheon Macroeconomics pointed out, the level of gross domestic product – the official yardstick for gauging the size of the economy – was still 17.1% below its January peak by the end of June. There is an awful lot of ground to make up.
There will be a further increase in national output in July and August, and, in all likelihood, the biggest quarterly drop in activity on record will be followed by the biggest quarterly rise on record.
But from now onwards the pace of recovery looks likely to slow. The number of Covid-19 cases has been rising steadily for some weeks and the government is going to be cautious about reopening the bits of the economy that remain closed. It may even close parts that have already opened in order to allow children to go back to school next month.
Temporary measures – the cuts in VAT and stamp duty, in particular – should bring forward spending and lead to faster growth in the coming months than would otherwise be the case. On the other hand, the phasing out of the furlough is already being accompanied by substantial job losses. Structurally, an economy that is heavily dependent on face-to-face services is vulnerable to a loss of confidence, whether caused by Covid-19 or the fear of unemployment. Britain had a whirlwind slump that really only lasted for two months. Recovery will take a lot longer.