The British economy could be headed for a recession.
According to the Office for National Statistics, the United Kingdom’s gross domestic product shrank by 2% in the first three months of the year — the biggest decline since the global financial crisis hit its peak in late 2008.
In March alone, the economy contracted by a record 5.8% — the largest monthly drop since record-keeping began in 1997 — as the coronavirus pandemic forced the government to impose lockdowns on much of the country toward the end of the month. That figure signals that the worst could be yet to come for Britain, which spent nearly all of April sheltered in place.
Last week, the Bank of England forecasted that the economy could shrink by roughly 30% in the first half of the year if lockdowns are eased in June as anticipated. Even though it predicted a recovery in the second half, the central bank expects the economy to slump 14% by the end of the year and see its sharpest downturn since 1706.
Separately, in the United States, the GDP contracted at a seasonally adjusted annual rate of 4.8% in the first three months of the year. It was also the steepest decline since the financial crisis and brought to a screeching halt the longest economic expansion on record for the country .
Although some states — including Colorado, Georgia, South Carolina and Tennessee — have begun to reopen in phases, economic activity is still well below levels prior to the health crisis. Many Americans are holding onto cash over fears of another recession, particularly as employers across the board have resorted to furloughs and layoffs that have left a staggering 33 million people unemployed over the course of a seven-week period. (These coronavirus-related job losses have wiped out all gains in the labor force since the Great Recession.)