British Economy Contracts by a Fifth in April

Author: Corey McDowell - Economics Editor

Published: 12 Jun 2020

Last Updated: 15 Jun 2020

Contents

Synopsis

Official figures from the Office of National Statistics (ONS) show that the British economy has shrunk by an eye-watering 20.4%, which is by far the biggest monthly fall since the ONS first began recording figures 23 years ago. This follows from the 5.8% contraction in March.

Credit: Sandy B, geograph.org.uk, CC BY-SA 2.0

Largest Monthly GDP Contractions

Date Monthly GDP Contraction
April 2020 -20.4%
March 2020 -5.8%
June 2002 -2.2%
June 2012 -1.5%
September 2008 -1.0%

The government imposed a country-wide shutdown on March 23rd in an effort to contain the spread of coronavirus. April was the first full month with these draconian restrictions, and the economic impact of this has made for grim reading. Workers have been made unemployed or furloughed, businesses have shut and output has fallen. Looking at the picture of the whole economy, it appears that the only sector that did not suffer a contraction is public administration:

The ONS has stressed that the gross domestic product (GDP) estimates for March and April 2020 were subject to ‘more uncertainty then usual’ due to difficulties in collecting the data during the shutdown. Collecting statistics on this scale is difficult enough as it is, and it should be noted that these figures are all estimates and can be revised when new information comes in. However, it paints a very bleak picture and shows Britain is likely in the middle of an economic depression.

Both gold and silver have appreciated in value since the ‘lockdown’ was imposed by the Conservative government. Over the last three months, gold and silver have strengthened against the pound by 7.18% and 6.09% respectively, although both precious metals are not currently priced around the highs recorded in mid-to-late May. Gold is currently priced at £1,373.50 per troy ounce and silver is currently priced at £13.93 per troy ounce. Precious metals are regarded as a safe haven during economic recessions, so now could be the opportune time to buy gold and silver.

Further Reading

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