The UK was declared the “sick man of Europe” by economists after a second quarter plunge in GDP bigger than anywhere else.
Under the bonnet, there were unprecedented collapses across almost every sector, but some industries bore the brunt of the pandemic blow. Here are the six charts showing where Covid-19 inflicted the most economic pain:
1. Sunak's wage subsidies support households
The unprecedented hit to the economy was borne largely by businesses rather than households, but incomes could soon start to slide.
The Chancellor’s wage subsidy schemes for employees and the self-employed have propped up incomes, the Office for National Statistics revealed. Pay for Britons slipped by just 2.2pc in the second quarter as a third of the private sector workforce was put on furlough. However, company profits plunged by 24pc.
The pressure on household incomes could build in the coming months as the furlough scheme is wound down and job losses begin to pile up.
2. Struggling services drives slump
The record collapse in GDP was driven by its largest sector seeing a fifth wiped off its output in a quarter.
The services sector accounts for around 80pc of the economy, a larger share than many other advanced economies, and drove the 20pc drop in GDP during the second quarter compared to the previous three months.
The reliance on services has made the UK more vulnerable than most to the Covid shock as swathes of the industry were forced to close. The falls in output in the services, industrial and construction sectors during the second quarter all broke records, but the monthly data suggests the economy’s recovery began in May and gathered pace in June.
3. Restaurants and hotels hit hardest but recovery begins
The economy was punished by its dependence on “social consumption”; spending on activities that involve interaction with other people, such as restaurants, or football matches.
Restaurants and hotels suffered most in the services industry, with accommodation and food seeing a 87pc output plunge in the three months to June. However, the sector will bounce back sharply in July as diners and drinkers returned after restrictions were lifted last month.
“The reopening of pubs and restaurants in July will have given accommodation and food output and overall GDP an extra boost last month,” says Paul Dales, chief UK economist at Capital Economics.
4. Factory shutdowns trigger production drop
Only the pharmaceutical industry saw production growth during a woeful first half of the year after demand was boosted by the health crisis.
Widespread factory shutdowns triggered a 17pc plunge in production in the three months to June. Manufacturers of transport equipment (which includes cars), machinery and metal products contributed most to a fifth consecutive quarterly decline, the ONS revealed.
“Many manufacturing plants (notably in the car sector) and construction sites were closed throughout April before starting to re-open from May,” explains Howard Archer, economist at EY Item Club.
The construction industry suffered the biggest drop in output of the three biggest sectors, plunging 35pc in the second quarter.
5. Britain enjoys biggest trade surplus ever, but for the wrong reasons
The UK recorded its largest trade surplus on record during the second quarter, but it was only driven by imports plunging more than exports.
Imports fell by £35.2bn as demand in the moribund UK economy tumbled, while exports slid by £26.7bn. Exporters of fuels, machinery and vehicles saw the biggest falls in goods sent overseas as global demand dwindled.
6. UK lags behind as long lockdown and services tilt take toll
That all added up to the UK economy being one of the worst affected by the pandemic in the world. A toxic combination of a long lockdown, a services-driven economy and plummeting global demand triggered a staggering collapse in GDP that was only matched by Spain.
While the UK took the crown for the biggest second quarter slump, Spain’s severe lockdown and tourism woes mean it endured a marginally worse first half of 2020. Spanish output sank 22.7pc in the first half compared to the UK’s 22.1pc drop.
However, Britain’s economy suffered far heavier damage than France, Italy, Germany and the US despite heading into lockdown later. More important now will be speed and strength of the recoveries but economists are bracing for a slow rebound in the UK stretching into several years as scarring deepens.
Despite a sharp bounce in June’s monthly GDP data, James Smith, economist at ING, warns it will “take at least another two-to-three years for the economy to regain all the lost ground”.
“Rising unemployment is probably the biggest threat to the recovery at the moment, and this is being linked to the gradual unwinding of the government’s furlough scheme over the next few months.”
Even if the worst of the Covid hit to GDP has now passed, the economy is likely to suffer for years to come.