Our experts explain why the UK economy is not out of the woods yet, and discuss the most likely shape of recovery.
The Office for National Statistics (ONS) has today published its latest GDP estimates which paints a clearer picture of the impact of the Covid-19 pandemic on the UK economy:
Key statistics include:
- UK GDP fell by 19.1% in the three months to May 2020.
- GDP grew by 1.8% in May 2020, but is still well below the levels seen in February 2020.
- The services sector fell by 18.9% in the three months to May 2020.
Richard Hunter, Head of Markets, interactive investor, says: “The June figures are likely to be better when they come, since they will reflect more of the lockdown easing and the potential for businesses to begin a tentative recovery.
“However, the nature of these figures and the central scenario from the Office for Budget Responsibility (OBR) does not point to a “V” shaped recovery, but rather a more pedestrian “Nike swoosh”. This seems more realistic given that the absolute financial impact of the pandemic is unlikely to become apparent for a considerable amount of time, let alone how the UK economy can react to the challenges and changes to business, some of which could become entrenched in the “new” economy.”
Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The data clearly shows that the UK economy is not out of the woods yet from the Covid-19 malaise - and a great deal of uncertainty remains. Having a well-diversified portfolio - both geographically and by asset class - should help investors navigate through economic uncertainty and choppy markets.
“It is important to remember that while markets have a good track record of rising over the long term, there are likely to be bumps along the way - and we need to learn to hold our nerve through these. Investing little and often on a monthly basis - a process known as pound-cost averaging - can help to smooth out the inevitable short-term bumps in the market for a (hopefully) positive return over the long term.”
interactive investor does not charge for monthly investing, whether funds, investment trusts or direct equities.
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