The UK economy was not as badly hit in the second quarter of the year as first feared but the almost 20% contraction still resulted in the country suffering the worst slump of any major economy.
A revised second quarter figure from the Office for National Statistics (ONS) moved the plunge down from 20.4% to 19.8%, while also proving a steeper contraction of 2.5% in the first three months of the year.
Previous estimates show that GDP fell 2.2% in the first quarter.
Despite the revision of figures, the UK still fell into the largest recession since records began and suffered far greater than any other major nation.
The ONS said: “While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place in response to the coronavirus pandemic.
“It is clear that the UK is in the largest recession on record.
“The latest estimates show that the UK economy is now 21.8% smaller than it was at the end of 2019, highlighting the unprecedented size of this contraction.”
Since the nadir of the recession in April, GDP has now grown for three months in a row, but has only made up around half of the ground lost during the pandemic, according to the ONS.
The lockdown saw a record-breaking 23.6% fall in household spending between April and June, which economist Samuel Tombs at Pantheon Macroeconomics said was “at the root of the UK’s underperformance”.
Forced to stay at home during the lockdown, Britons ramped up their savings instead of spending – sending the household saving ratio soaring to an all-time high of 29.1% in the second quarter.
This was up from the 9.6% saving ratio in the first three months of the year, according to the ONS.
Mr Tombs said: “Households’ spending appears to have rebounded strongly in the third quarter, as they spent some of the ‘enforced’ savings they accumulated in Q2.”
But he added: “The still-low level of consumers’ confidence, which has been weighed down by rising redundancies and the emerging second wave of Covid-19, suggests that households’ saving rate will return in the fourth quarter to a level much higher than seen before the virus struck.”