2020.08.1216:17:00UTC+00UK Economy To Grow 15% In Q3: NIESR

The UK economy is set to expand 15 percent in the third quarter after a record contraction in the second quarter, if the coronavirus, or Covid-19, pandemic is contained, the National Institute for Economic and Social Research said Wednesday.

Official data revealed earlier in the day that the economy shrunk a record 20.4 percent in the second quarter after a 2.2 percent fall in the first three months of the year, thus entering a technical recession.

The Office for National Statistics also said it was the first recession since the global financial crisis of 2009 and the largest one ever experienced by the UK economy.

Meanwhile, the monthly GDP estimate for June revealed an 8.7 percent growth, as more firms returned to business after further relaxation of the Covid-19 lockdown measures. Yet, the GDP is a sixth below its level in February.

"Despite the recovery noted in June, the path ahead remains precarious," NIESR Senior Economist Kemar Whyte said.

"An extended period of growth will be required to make up the ground lost in recent months."

The think tank has predicted a 10 percent fall in GDP this year and 6 percent growth next year, on the assumption that there is no resurgence of the pandemic and no reintroduction of the containment measures.

The NIESR expects the service sector, which forms 80 percent of GDP, to grow 14 percent, and production to expand 16.1 percent in the third quarter. Manufacturing output is forecast to jump 20.3 percent and construction to surge around 35 percent.