During the third quarter of 2020, UK GDP moderated its contraction compared to the previous quarter, and stood at a year-on-year growth rate of -9.58%. CPI Inflation decreased down to a rate of 0.57% during the third quarter. Furthermore, despite the government's support schemes, the economic effects of the Covid-19 pandemic continued to affect the labor market, resulting in a rise in the unemployment rate and a slowdown in employment growth. The sterling pound appreciated against the dollar, and recorded an average exchange rate of 1.29 $/£ during the quarter.
Macroeconomic outlook report: UK 3Q20
- During the third quarter of 2020, UK GDP moderated its contraction by 11.88 p.p. compared to the previous quarter, and stood at a year-on-year growth rate of -9.58%. This result was mainly due to the partial recovery of domestic demand, driven by the relaxation of the containment measures implemented to contain the spread of the virus, which led to a rebound in consumption and investment.
- The labour market showed weakening figures. The unemployment rate increased by 0.70 p.p. when compared to 2Q20, up to a rate of 4.80%. Employment in the UK recorded a y/y growth rate of -0.75% during the third quarter of the year, after a deceleration of 0.32 p.p. when compared to the previous quarter.
- The sterling pound registered an appreciation of 0.05 pounds per dollar during the third quarter with respect to 2Q20 and stood at a 1.29 $/£ exchange rate.
- The inflation rate declined from the previous quarter to a rate of 0.57%. As a result, CPI inflation stood below the MPC target of 2%, largely reflecting the effects of Covid-19 on the economy.
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