A recession is considered to be happening when GDP declines for two successive quarters - which has not been seen in the UK since 2009, amid the financial crisis.
Despite the dramatic fall across the quarter, monthly GDP grew by 8.7% in June 2020 as lockdown measures eased, following upwardly revised growth of 2.4% in May and a record fall of 20.0% in April 2020.
The ONS report said: "This is the largest quarterly contraction in the UK economy since ONS quarterly records began in 1955, and reflects the ongoing public health restrictions and forms of voluntary social distancing that have been put in place in response to the coronavirus pandemic."
Hinesh Patel, portfolio manager at Quilter Investors, commented: “Today’s GDP figures confirm the UK is in recession, one that will likely take a considerable amount of time and effort to get over. This is not a normal recession after all. However, the long, slow road to recovery is underway, just not at the speed we were all hoping for during the initial national lockdown.
“Economic output remains at a fraction of what it was in February, and as such it is clear further stimulus is going to be required. The UK relies so heavily on the services sector and consumer consumption. With the government potentially coming to the maximum limits of reopening that is possible and favouring localised lockdowns in the future to prevent further economic reckonings, they need to get people consuming as much as they can. However, the fact of the matter is that many industries still going to struggle through the recovery.
“While the overall picture is shocking, the Bank of England has left itself room to act from a monetary perspective. This shifts eyes onto Rishi Sunak to see if his innovations can be successful. The Eat Out to Help Out scheme appears to have gotten off to a good start, and it is this more targeted stimuli that other industries will be craving. The UK public loves a deal, so this scheme may provide a template for future targeted stimulus. The house builders in particular will be watching it closely, particularly given the proposed relaxation in planning laws.
“With Brexit negotiations seemingly going nowhere, and as a result businesses fighting for survival on two fronts, business investments and growth in the UK is likely to remain subdued for some time yet. Opportunities do exist for investors, though, and with a harshly competitive environment we expect to see those quality and innovative companies prosper. Throw in further stimulus come the Autumn and these companies may be the ones to benefit greatly.”
