The UK’s leaders announced a further easing in lockdown measures to take effect in July, allowing a large proportion of the country’s leisure and tourism sector to reopen, albeit with strict guidelines on social distancing.
- The UK economy contracted by a record 20.4% during April
- The retail sector continued to struggle
- Brexit negotiations began to reattract attention
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The UK’s leaders announced a further easing in lockdown measures to take effect in July, allowing a large proportion of the country’s leisure and tourism sector to reopen, albeit with strict guidelines on social distancing. However, a local lockdown was imposed in Leicester at the end of June following a sudden surge in infection.
“It is feared that job losses will surge once Government support ends”
Consumer confidence continued to deteriorate during late May, according to GfK, as householders fretted about the state of their finances and the wider economic outlook. Nevertheless, confidence subsequently rallied slightly in June as lockdown measures began to ease.
The FTSE 100 Index rose by 1.5% during June, while the FTSE 250 Index climbed by 0.9%. Over the first six months of the year, they fell by 18.2% and 21.4% respectively.
With only six months of the transition period remaining, Brexit began to return to investors’ attention. Chief EU Negotiator Michel Barnier said the UK was “backtracking” on its commitments and that little headway was being made. The Confederation of British Industry (CBI) described progress as “worryingly slow”, warning that it was causing “deep concern to firms when resilience has rarely been more fragile”. The Organisation for Economic Cooperation & Development (OECD) said that the UK was at risk of further economic instability if a Brexit deal was not agreed with the EU by the end of 2020.
The OECD expects the UK economy to contract by 11.5% during 2020, compared with forecast declines of 7.3% in the US, 6.6% in Germany, and 6% in Japan, and the scenario could prove even worse if there is a second peak in the virus. The UK economy contracted at a record monthly rate of 20.4% in April, and shrank more rapidly than initially calculated during the first three months of the year, contracting at a quarterly rate of 2.2%, compared with an earlier estimate of -2%.
May proved to be “yet another month of struggle for retailers”, according to the British Retail Consortium (BRC) which reported an annualised drop in total retail sales of 5.9% alongside record growth in online sales.
According to HMRC, 9.3 million UK workers were on the Government’s furlough scheme at the end of June. While this has helped to keep the UK’s rate of unemployment stable during lockdown, it is feared that job losses will surge once Government support ends.
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