Britain has officially entered into the largest recession on record after figures showed the pandemic sent the economy plunging by 20.4% between April and June.

The Office for National Statistics (ONS) confirmed the UK's nosedive into recession for the first time since the financial crisis after the record-breaking contraction in the second quarter, which follows a 2.2% fall in the previous three months.

A recession is defined as two successive quarters of decline in gross domestic product (GDP).

READ MORE: Warning of winter spike in company failures

But monthly figures showed the economy bounced back by a slightly better-than-expected 8.7% in June, following upwardly revised growth of 2.4% in May, as lockdown restrictions eased.

The ONS said the economy is still a long way off from recovering the record falls seen in March and April after tumbling into "the largest recession on record".

The grim second quarter figures showed the UK suffered the biggest economic hit from the pandemic in western Europe, even beating Spain's eye-watering 18.5% drop.

Chancellor Rishi Sunak said that the ONS figures "confirm that hard times are here".

"Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.

"But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity."

It comes after ONS data on Tuesday showed around 730,000 UK workers have been removed from the company payrolls since March, while employment also dropped by the largest amount in a quarter since 2009 between May and June.

The ONS said the UK economy is now 22.1% smaller than it was at the end of 2019 and 17.2% below levels seen in February, despite two months of growth since the nadir of the recession in April when the UK was in full lockdown.

Jonathan Athow, deputy national statistician at the ONS, said: "The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

"The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover.
"Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

"Overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months."

Experts said that hopes of a swift V-shaped recovery look dashed, with the Bank of England warning last week the UK could take longer to rebound than previously predicted.

The Bank forecast the economy would not jump back to pre-virus levels until the end of 2021.

The ONS initial second quarter estimate shows that the services sector - which accounts for around three quarters of UK output - dropped 19.9%, with the construction sector off 35% and manufacturing down 20.2%.

Samuel Tombs at Pantheon Macroeconomics said: "The UK economy has underperformed its peers to an extraordinary degree."

"The underperformance can be attributed partly to the economy's greater reliance on consumer services spending and the high level of labour market participation by working parents, many of whom have left work to look after children," he added.

Fashion giant Asos has said its customers are still being more careful about what they buy to avoid sending clothes back - pushing the online retailer to beat market expectations.

It said returns are still low, after being reduced during lockdown, and are not increasing as fast as it had feared.

READ MORE: Major housebuilder upbeat over Scotland despite later exit from lockdown

"We had expected to see underlying returns normalise once lockdown measures eased and customers were both able to ship returns and felt more comfortable doing so," Asos said in a statement to shareholders on Wednesday morning.

"However, in recent weeks, we have gained better visibility on this pattern in customer behaviour as we have progressed through the returns cycle, and it has become evident that returns are not increasing at the rate we originally anticipated."

Part of the reason people are returning fewer items to the company is because they have changed what they buy on the site. Items such as activewear and mascara are less likely to be sent back in normal times.

However, there has also been a "prolonged shift in customer behaviour towards more deliberate purchasing", Asos said.

rofit before tax is now likely to be between £130 million and £150 million for the full year, up from £33.1 million the year before.

The company also expects revenue to grow between 17% and 19%, ahead of market expectations.

Experts were predicting that revenue would be up 15.1% while profit before tax would reach £58 million.

Shares jumped 9.5% on the news.

Asos said the economic outlook is uncertain and it is "unclear how long the current favourable shopping behaviour will persist".

"The second half has been a period of tremendous change for Asos; we have made real progress and shown resilience through the period and are exiting the year in a strong position."

Liberum analyst Adam Tomlinson said the news comes a day after Zalando reported a high single-digit percentage decrease in return rates.

"A key driver of (Asos's) better profit outturn for the year is that return rates are better than expected, which is consistent with what Zalando said yesterday," he said.

He added: "While Zalando expects return rates to revert back to pre-Covid levels, Asos are not seeing this dynamic play out at the rate they were expecting."

The head of food delivery giant Just Eat Takeaway.com has said the Government's scheme to give diners half-price restaurant meals has not damaged his business.

Chief executive Jitse Groen said that, despite takeaways being excluded from Eat Out To Help Out, which gives diners a 50% discount, he is seeing little effect.

READ MORE: Device to help pubs control Covid-19 unveiled

"Food delivery is rarely in direct competition with restaurant visits, and that doesn't change under these circumstances," the Dutch boss said on a call with the press on Wednesday morning.

Restaurants have limited capacity because they can only seat a certain number of people, he said.

"We don't believe that there will be a material impact on our figures because of these relief measures from the UK Government."

Mr Groen said he was not personally upset that the Competition and Markets Authority cleared Amazon to take a stake in its UK rival, Deliveroo.

But he added: "I am an entrepreneur, I don't particularly care who's competing with us.

"I think the UK consumer should be upset that that happened.

"And that has nothing to do with Deliveroo, that has something to do with Amazon."

Just Eat Takeaway.com processed around 257 million orders in the first six months of the year as takeaway companies supplied food to people in lockdown.

The company said that had pushed up its revenue, while it added a record number of new restaurants and customers to its system.

The number of active customers increased from 44 million to 54 million compared with the same time last year, it said.

Customers are also ordering more, Mr Groen said.

The Dutch firm said its like-for-like pre-tax loss was 121 million euros (£109 million), on revenue that had increased by 44% to just over one billion euros (£927 million).

"Just Eat Takeaway.com is in the fortunate position to benefit from continuing tailwinds," Mr Groen said.

"On the back of the current momentum, we started an aggressive investment programme, which we believe will further strengthen our market positions.
"We are convinced that our order growth will remain strong for the remainder of the year."

Just Eat Takeaway is in the process of buying US peer Grubhub for 7.3 billion US dollars (£5.6 billion).

The deal is likely to complete in the first half of next year, but Mr Groen declined to talk more about it.

The deal is set to make the company one of the biggest delivery firms in the world outside China.

You can now have the bulletin and the top business news stories sent direct to your email inbox twice-daily for free. Tick Business Bulletin AM edition and Business Bulletin PM edition, and Business Week for the weekly round-up on Sunday, in the newsletters section here to sign up:

https://www.heraldscotland.com/my/account/register/