The U.K. is on course for one of the worst double-dip recessions in its recorded history after data released showing the growth of the U.K.’s service sector stalling for a second time.
Data released from Cips Monthly survey, which shows three quarters of economic activity in the U.K. had stalled in the month of October. Causing the Bank of England to announce a new £150bn of Quantitative Easing (QE).
The survey said that several months of falling consumer confidence, and reduced demand for hotels and restaurants has caused the slow.
Two quarters of negative growth occurred within the first 6 months of 2020 which means the U.K. entered recession. When this happens over a short period this constitutes a double dip recession.
Samuel Tombs, UK economist at Pantheon said that October marked a turning point on several fronts due to the sharp drop in the use of public money’ going on to say that:
“The second wave of Covid-19 is the obvious driver of the slowdown”
Although, it remains to be seen how much the government decision to lockdown a second time is to blame and to what extent. Howard Archer, chief economic adviser to the EY item club stated
“There seems little doubt that a renewed national lockdown will cause the economy to contract again in the fourth quarter this will last into 2021“
On the human side there has been 0.4% uptick in unemployment, with the most recent figures showing over 1.5 million people unemployed by the start of September according to the ONS. With over 150 thousand more 16-24 year olds are out of work compared with 3 months prior to these recent figures.
Despite the furlough being extended to March 2021, the Treasury has admitted hat it is a short term response meaning that they expect the situation will to get worse before it gets better.