The Economy and How It Affects You
A few months ago, the Ofice for National Statistics confirmed that the country had entered a recession. A blow after 11 years of steady recovery. In July, there was a 6.6 per cent spike in growth in the economy, but experts are quick to remind us not to celebrate just yet.
The "recovery" is considered a result of businesses reopening after lockdown. But now things have moved substantially since then. So the question posed now is: what's next for the UK Economy?
First, we must cover what a recession means. In a normal year, a country works hard to make sure its economy grows. The citizens would feel this growth as the values of goods and services produced also increases. This is the Gross Domestic Product or GDP of a country. But sometimes, there is a decline in the value of goods and services produced. When this happens for two quarters in a row, this is called a recession. When it happens for a longer period it is then called a depression.
It has been the first time since 2009 for the UK to experience this.
In the first quarter of 2020 (January to March), the UK GDB fell by 2.2 per cent. The economy was beginning to feel the effects of the lockdown. During the second quarter, the lockdown halted many areas of the economy. From April to June, the economy witnessed the steepest fall on record at 20.4 per cent.
The International Monetary Fund has already stated that according to their study, 2020 will be the worst recession since the 1930s' Great Depression. The way things are going at present, the world economy is predicted to shrink by 4.9% this year. The IMF predicts a huge fall in GDP for powerful countries (8.0 per cent for the US and 10.2 per cent for the UK).
The last recession in the country ran for five quarters beginning in the second quarter of 2008 and onwards. The GDP fell at 7.2 per cent overall. It was a period of unemployment for many citizens. Steep cuts were made in different areas of government spending.
How The Recession Will Affect You
Many more people may lose their jobs or stay in the status quo for a longer period. Promotions or pay rises may not come as promised. Getting a first job will be harder for recent graduates.
The UK Economic slump may not be as severe as in the past, the Bank of England positively observes. But recovery time may take longer.
The Independent writes a simple recommendation for those unsure of what is next: "There is a strong argument that spending money on jobs and training now will be a good investment."
For more insights, read: What is likely to happen to the UK economy this year and what can be done about it?
