At its peak in April the lockdown reduced economic output by 25%, making the coronavirus crisis by far the deepest recession on record. The peak-to-trough fall in GDP was 7% in both the Global Financial Crisis and the Great Depression. Having plumbed those unprecedented depths, the economy is now on the return leg.
Given the lockdown started to be eased in May, April will mark the trough in GDP. Overall, we are past the worst. But the recovery will be a drawn-out affair as restrictions are only lifted gradually and businesses and consumers continue to exercise caution. And while the trough in activity is now behind us, the fiscal cost of the collapse and the impact on the labour market, including the rise in the unemployment rate to over 8% that we expect, are only just starting to emerge.
