The UK economy suffered a bigger decline than any other major European economy in the second quarter as coronavirus lockdown measures tilted the country officially into recession.

The British economy contracted by 20.4 per cent compared with the first three months of the year following a 2.2 per cent contraction in the first quarter.

Household spending plummeted as shops were ordered to close, while factory and construction output also fell. This pushed the UK into its first technical recession − defined as two consecutive quarters of negative growth − since 2009.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover,” ONS deputy national statistician for economic statistics Jonathan Athow said.

Meanwhile, in Germany, according to the latest business survey from the Ifo economic institute, firms expect COVID-19 restrictions to last for another 8.5 months on average, until around April next year.

Companies in the leisure sector are the most pessimistic: they don’t expect a return to complete normality in public life for another 13 months. They are closely followed by restaurant and catering business owners, as well as the arts, who believe coronavirus restrictions will continue to impact them for a further 11 months. Germany has had to contend with a resurgence in coronavirus cases over the past weeks to daily cases not seen since May.

Finally, in the US, consumer prices rose more than expected in July, with a measure of underlying inflation increasing by the most in more than 29 years amid broad gains in the costs of goods and services. The Labour Department said on Wednesday that its consumer price index rose by 0.6 per cent for the second month in a row. Economists had forecast a 0.3 per cent advance. The higher prices further dispel fears of deflation, a decline in the general price level that is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.

On the other hand, the report probably does not mark the start of worrisome inflation, and the Federal Reserve is likely to continue pumping money into the economy to underpin the recovery from the COVID-19 recession.

This report was compiled by Bank of Valletta for general information purposes only.