man with hands on head looking at inverted yield curve graph and worried about a UK recession

Frances Coppola discusses a remarkable recession

17 August 2021
Reading Time: 6 mins

After over a year-and-a-half of chaos, it’s little wonder there are so many views on where the economy might be headed.

A few weeks ago we ran our interview with Jennifer Arcuri, Boris Johnson’s former mistress, who gave some pretty scary predictions which you can read here.

This week we’ve got the view of respected British economist, Frances Coppola. Frances worked in banking for over 17 years, but is now a financial writer and has featured in Financial Times, The Economist, The Guardian, and many more publications.

So we hand over to her expertise…

N.B. everything below is Frances’ own opinion and and doesn’t necessarily represent the views of Jasmine or the MoneyMagpie team. None of it should be taken as financial advice. Read on and make up your own mind.

A remarkable recession…by Frances Coppola

The 2020-21 recession is remarkable. GDP fell by nearly 10% between February 2020 and February 2021. By comparison, the financial crisis of 2008-9 caused annual GDP to fall by only 4%. Even in the Great Depression of 1930-34, the largest GDP fall was less than 8%. Not since the Great Frost of 1709 has GDP fallen so much in one year.

Now, the speed at which the economy is recovering is equally remarkable. Between April and June 2021, as coronavirus restrictions were eased, GDP increased by 4.8%. The UK hasn’t seen a quarterly growth rate that high in living memory. The economy is still smaller than it was in 2019, but it’s catching up fast, though growth is expected to slow over the rest of the year. The Bank of England estimates that the economy will be back to where it was before the pandemic by the end of 2021.

Perhaps the most remarkable thing about this recession, however, is its cause. Never before in history have governments the world over deliberately shut down their economies to prevent the spread of a virus. There have been global pandemics before, of course. The Spanish flu of 1921 is one such, and although there was no government-mandated shutdown, its economic effects in the UK were very nearly as severe as those of Covid-19: GDP fell by 9.7% in 1921. If governments hadn’t shut down their economies in 2020, would there have been such a severe recession? The lesson of the Spanish flu suggests that yes, there would.

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