UK officially in recession for first time in 11 years

https://www.bbc.co.uk/news/business-53748278

by vijayr02 • 6 years ago

42 102 6 years ago

bbc.co.uk

LatteLazy3• 6 years ago

Comparing corona-quarantine times with normal times is silly.

But the recession has hit the UK harder than many other European countries. That strikes me as comparable and indicates that it has been more poorly handled by the UK than by other countries.

niklasrde• 6 years ago

Do you have any more figures than what's in the article? In the article it's got these figures:

The economy is more than a fifth smaller than it was at the end of last year. This fall is not as bad as the 22.7% decline in Spain, but about twice the size of contractions in Germany and the US.

I think Germany's handling was exceptional anyway, and for the US it hasn't hit fully yet. I reckon there's a lot more to come in the UK, as well, when the government furlough scheme comes to an end. And not to forget to mention the country is still in the Brexit transition period, which runs out at the end of the year.

monkeydust• 6 years ago

The UK stayed in a deep state of lockdown longer than most other European countries, that's why the relative numbers are bad. Question is, did it work, was it worth it? (saving lives)

rosstaylor90• 6 years ago

No, the primary reason is that the UK is a heavily service-based economy. Quarantine impacts the service-based subset of the economy the most. Therefore it makes sense that the UK would be hard hit. A “nation of shopkeepers” suffers when the shops are closed...

kingkawn• 6 years ago

Money still money

LatteLazy3• 6 years ago

I'm not sure that's true given the current printing press outputs. And even if it is true, the link to official GDP figures is very weak. And even if it weren't, you only have half the GDP figures: we're down X now but we will be up Y when we re-open. If Y>X then we're laughing. And even if all this were not the case, what price a human life and is it a bad thing if for 6m people spend more time at home with their kids being happy but don't spend much?

That's the issue here. One data point, of spurious accuracy, which we fully know and expect to be an outlier is being used to imply an economic trend and that trend is being extended to social trend. I could just as well say "the stock market is up so we are clearly fine"...

OJFord2• 6 years ago

Well.. 'recession' is defined as two consecutive quarterly contractions in GDP. The argument (and I'm not taking a view) is that this is not a good measure for a year like this; that the consumer demand is there, but that the supply is artificially reduced or extinguished (in some sectors more than others).

A proponent of this argument would say it's meaningless - or at least not helpful - to worry about two (or more) quarters of contraction, only to have them followed by stupendous 'growth' once everything's OK and the hibernating demand has somewhere to go.

Someone more critical of it might say Well yes, 'or more', for how long can we hibernate?

0134340• 6 years ago

Recessions aren't "normal times". Despite externalities, whether economic abnormalities, pandemics and so on, it still hits the savings account the same and worth comparing for history's sake.

georgespencer7• 6 years ago

Excited for my second once in a lifetime economic correction!

ChuckNorris89• 6 years ago

Out of curiosity, why are you excited about this?

PopeDotNinja• 6 years ago

2009 happened.

cjrp• 6 years ago

The 2008 recession was considered a "once-in-a-lifetime" event. it's ironic that we're now experiencing a second.

leonroy2• 6 years ago

I imagine op is referring to 08-09 which was touted as the biggest economic crash since The Depression.

chosenbreed37• 6 years ago

Maybe they want to "buy the dip" and bet on a recovery. Or maybe they've been shorting UK Plc somehow :-)

georgespencer7• 6 years ago

Sorry, I was being facetious: my second once in a lifetime economic correction :)

barrenko3• 6 years ago

I was born to a war, graduated to the 2008 recession, and now it's 2020. Still, excluding my parents generation, I consider myself very lucky.

happymellon• 6 years ago

Ah ha I have another event, I graduated in 2002 right into the dot-com bubble burst, with its mass unemployment in software development. That was a hard time as a grad, competing against massive amounts of experienced professionals with a massively reduced job market then with a follow up 2008 recession and now a 2020 recession.

Millennials keep getting fucked.

elindbe2• 6 years ago

Yeah I just hope and pray that this century doesn't turn out like the early-to-mid 20th century.

Marat_Dukhan• 6 years ago

What a time to be alive!

BerislavLopac• 6 years ago

Only second?

Jestar342• 6 years ago

BBC desperately trying to add some positivity to the headline. It's the worst recession on record, and yet they are clamouring onto this notion that it has been an achievement of success that it has been 11 years since the last recession.

thu21115• 6 years ago

BBC has been very pro-lockdown, pro-panic the whole time. Now they are seeing the results and trying to spin it positively, so less anger reflects back at them.

logicchains• 6 years ago

An interesting thing about percentage change in GDP is it's worse on the downside than the upside. If GDP falls 40% one year, then rises 40% next year, it's not back at 100% of what it was before, it's actually only back to 84% (1.4 * 0.6).

kenniskrag• 6 years ago

not only for GDP but also for stocks. People assume if they loose 10% they need a 10% gain but that is not true: https://static.seekingalpha.com/uploads/2018/11/8/saupload_i...

parenthesis• 6 years ago

Easy way to convince people of this: after a 50% fall you need to double (up 100%) to get back to where you started.

kraghen• 6 years ago

I sometimes wonder if using logarithms would be more appropriate in most cases. Then we can simply add up the numbers as one "would expect".

We could choose the base to be ~2.7048138 such that 1% regular growth corresponds to 1% logarithmic growth. For low percentages they would mostly agree. But +40% would become +34% while -40% would become -51%, thus making the combined effect more apparent.

barbegal• 6 years ago

It's one of the reasons why decibels and logarithmic scales are so useful. A drop of -2dB and a gain of +2dB gets you back to where you started.

clement_b• 6 years ago

What I find interesting, is that those who were betting on Brexit were probably doing so thinking it might be a little bit tough in the short term believing the UK will end up being stronger in the end.

With such a massive recession already happening, and talks around Brexit going nowhere, they are really not going to have a nice next 5/10 years.

I have just left the UK, several Europeans I know, working in tech, are doing the same. Not data backed, just personal experience. Maybe this is going to be even tougher than expected. Hopefully not.

LatteLazy3• 6 years ago

Congrats on getting out!

callamdelaney• 6 years ago

as coronavirus lockdown measures pushed the country officially into recession.

This is nothing to do with brexit.

maxehmookau4• 6 years ago

Yes, but Brexit won't help the (now much more acutely needed) recovery.

akmarinov• 6 years ago

Yep, this is the first punch from the Corona and the second punch will be beginning of next year when they end up with no deal.

The sad thing is that everyone will say that Brexit went through great with no issues, it's the Coronavirus' fault that the economy is bad and is getting worse.

peterclary• 6 years ago

Things had already started looking very shaky even before Covid-19. City firms moving jobs abroad. Companies seeing orders drop off as EU buyers switched to sources that wouldn’t be affected if the UK left the transition period without a deal. Even with a deal, not being in the same customs union introduces issues that EU customers can avoid by switching suppliers.

MagnumOpus• 6 years ago

The fact that the economy shrank is due to covid response.

The fact that the economy shrank 22% over the last year rather than 12% in Germany or 10% in the US (a 10% growth difference is _enormous_!) is up to Brexit and government ministers selected not on the back of competence but by picking from the strongest Brexit advocates.

danjac4• 6 years ago

Data shows that even British natives are leaving in higher numbers:

https://apnews.com/2be77e0ade49893bfefe508eb15c2d56

I suspect the government will use the pandemic as cover for all the failures of Brexit, and they will get away with it given the dire state of British traditional and social media. You're better off out of it.

barrenko3• 6 years ago

I dunno, the point of hard moves like Brexit is that it gets way worse before it gets better. But I'm sure it will be better.

Germany and the rest of EU are just oblivious for now.

danjac4• 6 years ago

But I'm sure it will be better.

Based on what exactly?

imtringued• 6 years ago

What will get better? There are basically no economic benefits since the UK still has to follow EU regulations and pay tariffs on top of that, if it wants to export its products and services to EU countries.

The biggest change is that the UK can close its borders to citizens of EU countries.

joelbluminator6• 6 years ago

It's hard to say what will happen. It's not like the EU project is a stable, sure-win project. The EU could potentially collapse. Even if it doesn't a Euro devaluation against other currencies (not necessarily USD) may happen because the south needs to be bailed out. Add to that stagnant growth, rising populism, backlash against immigration etc etc.

lol768• 6 years ago

I have just left the UK, several Europeans I know, working in tech, are doing the same. Not data backed, just personal experience. Maybe this is going to be even tougher than expected. Hopefully not.

Out of interest, where did you end up?

Ireland looks tempting to me, given I currently work as a contractor (and the tax law isn't too hostile) and it's not _too_ far away.

thewarrior3• 6 years ago

I recently saw a graph that shocked me. Basically the UKs per capita GDP has been constant since 2008 ! If you smooth out the ups and downs it’s just gone sideways.

The UK is a nation that is stagnating and this one two punch could be what pushes it into a decline.

Brexit has become something of a religious movement. Things will magically get better after brexit but first you need suffer for your past sins before you get to the promised land. It’s not at all clear how this will happen but the less possible it looks the stronger the faithful become.

People like me who try to dissuade people from Brexit try to paint a picture of doom and chaos. The UK will be “fine” but it will fall in the League of Nations to the influence of an Italy or a Spain and in the long term this can be hard to swallow for people used to the glories of empire.

This is also one of the most egregious cases of the older generation screwing over the futures of a younger generation by taking away huge opportunities from them. The enormity of this will take a decade to sink in. You’re going to see a lot of pissed off zoomers in 10 years who’ll work to reverse all of this anyway.

danjac4• 6 years ago

Italy or Spain is a best-case scenario. Looking at recent polls in Scotland - where support for the Union has collapsed among the under 50s - the UK will be lucky to still be a single country in 10 or 15 years' time.

thu21115• 6 years ago

See, this is what annoys people about the anti-Brexit brigade.

There are two very important facts you're not giving people here. Firstly, yes, the UK has had stagnant GDP per capita since 2008. So has Germany, so has France. So has Switzerland, since 2010. Clearly, this is not a UK specific issue.

The exceptions? America and ... Ireland. That's tech companies. They are big enough to move per capita GDP by themselves.

The second rather important fact is that the UK is still a part of the EU today for all intents and purposes. It still has to pay and is still a part of all the systems. What you're saying is that as part of the EU the UK, and additionally other major European economies, have seen 12 years of economic stagnation.

You know what one of the top arguments for Brexit was? The EU is a stagnant economy, structurally so, and it's getting worse. If we leave we can be more dynamic and fix that problem.

hard to swallow for people used to the glories of empire.

This is such a bizarre, insulting and ridiculous talking point. Remainers bring it up repeatedly but I've never encountered someone who supports Brexit who talks about the British Empire. It doesn't happen. It's a fantasy.

kristiandupont• 6 years ago

After the UK voted for Brexit I became interested in what treaties and trade deals are and how they are made. It turns out to be much more complex than I had imagined. The amount of legal and diplomatic work that the UK is facing is unfathomable. I can't see any scenario where this is not going to be extremely expensive.

maxehmookau4• 6 years ago

those who were betting on Brexit were probably doing so thinking it might be a little bit tough

No. Nobody who voted for Brexit was thinking logically or clearly at all. Anybody can dismiss this as a political opinion, but not a single person who supported brexit did so for anything other than :

* Flag-waving nationalism. * Financial self-interest from a long-term reduction in EU standards. * Perceived (but incorrect) financial self-interest.

lucozade• 6 years ago

Nonsense. I think Brexit was a particularly stupid idea but I've spoken to a number of people who voted for Brexit and every one had a perfectly sound reason that I happen to disagree with or don't consider an important issue. Interestingly (to me), not one of them voted for financial reasons.

merrvk• 6 years ago

Worst out of all of the G7

monkeydreams• 6 years ago

Worst out of all of the G7 so far. The US is still yet to manage its coronavirus problems and I suspect that the impact when the US finally manages to tackle this, it will dwarf anything the UK is dealing with.

kgraves4• 6 years ago

There is no hope for the UK, especially the disaster that is the UK tech industry.

After the lockdown is over, people who reside there should get out while they can.

throwewey• 6 years ago

Disaster, could you elaborate?

_Wintermute2• 6 years ago

Not sure the UK tech industry is a disaster, I left the UK for France following the Brexit result and it has really opened my eyes to how good it was in the UK.

leonroy2• 6 years ago

Mind weighing in on the pros and cons of your experiences in the UK vs France?

MaxBarraclough• 6 years ago

Please expand on this. Are you referring to technical sloppiness, compensation, availability of jobs, something else?

kgraves4• 6 years ago

ARM was sold off on the cheap thanks to Brexit, I can only imagine how other UK companies would fare under Brexit Britain + Pandemic.

joelbluminator6• 6 years ago

What? It has the best tech industry in Europe in almost every metric you can think of. Maybe you mean UK outside London which is probably comparable to continental Europe, but London is booming.

raxxorrax3• 6 years ago

Aside from maybe Dublin, this seems to be true. Obviously that has to do with synergies of the language alone that gets you a large advantage for your location.

kgraves4• 6 years ago

It has the best tech industry in Europe

The UK sold ARM to Softbank, Imagination Technologies to a private equity firm in China, SwiftKey to Microsoft, DeepMind to Google, Deliveroo to Amazon, Dyson has gone to Singapore and most of these startups will not exist in 20, 30 or 40 years time.

The UK's homegrown tech companies are selling out and you think it is still best in Europe? Thanks to Brexit there is no hope.

but London is booming.

OK, but compared to the UK as a whole, disaster. I expected jobs to flow all through the UK, not be crammed into London where people from other areas have to travel there by train or suffer rent hikes, thankfully this pandemic has put an end to this.

maga20yes• 6 years ago

It's what people demanded. UK is still in semi-lockdown, with only 30% of office workers returning to the office. UK proposed a more relaxed approach at the start but backfired in the public opinion. Now, here's the arithmetic result of forcing people in their homes.

Also, UK relies heavily on services, international business, students, tourism, all heavily hit, so that increases the pain of a travel and mobility freeze.

barrenko3• 6 years ago

GDP as a measure is a scam.

s_dev• 6 years ago

Some models are useful, the map is never the territory etc.

UK officially in recession for first time in 11 years

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