The UK is officially in recession after its economy shrunk by over 20 percent between April and June this year, compared with the first three months of the year. According to the Office for National Statistics, record falls were reported in services, factory and construction output in response to restrictions imposed by the Government to cope with COVID-19.

Household spending fell by 23.1 percent and while some improvement was reported in June as government restrictions on movement began to ease, GDP for June remains well below levels in February.

To somewhat address this, the Bank of England has put in place a package of measures, including:

• cutting interest rates to 0.1 percent, meaning cheaper loans for businesses and lower interest rates on mortgages;
• incentivising banks to offer more lending to small and medium-sized companies;
• supporting large businesses and their employees by offering them loans for up to twelve months.

In its Monetary Policy Report and Financial Stability Report published on 6 August, the bank said that UK banks are strong enough to keep lending to UK households and businesses and, in doing so, will support economic activity and limit longer-term economic damage.