UK sees biggest GDP fall since records began

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The UK economy contracted by more than a fifth in the first full month of lockdown – the largest fall since records began.

The Office for National Statistics said that economic activity was down by 20.4% in April. It is the largest drop in a single month since records began in 1997.

The fall massively outstrips the then-record 5.8% drop in March gross domestic product (GDP) that the ONS reported last month.

It means that GDP fell by 10.4% in the three months to April and sets the UK on course for one of its worst quarters in history.

May’s GDP figures are also likely to be awful, before things start to ease again in June as the economy slowly reopens.

Large parts of the British economy were placed on ice on March 23 when Prime Minister Boris Johnson told people they must stay inside and only leave the house when absolutely necessary.

The measures were announced to slow the spread of Covid-19.

Experts had been expecting April’s GDP to contract by 18.7%, according to a consensus compiled by Pantheon Macroeconomics.

The fall in GDP due to the coronavirus lockdown is “unprecedented”, the Office of National Statistics (ONS) has said

Jonathan Athow, deputy national statistician at the ONS, told BBC Radio 4’s Today programme: “Well, 20% is really unprecedented. Actually, if you take March and April together the fall was 25%. So in two months the economy shrank by a quarter.”

He added said: “The biggest fall we have seen before was just over 2% – so, it’s 10 times the size of the largest fall we have seen before the coronavirus.

“Virtually every sector has been shrinking.”

Shadow Chancellor Anneliese Dodds warned the UK economy is shrinking at a faster rate than those of other developed countries.

Speaking on BBC Breakfast, Ms Dodds said: “What particularly concerns me is that actually we’re not just looking at one month of economic damage.

“There was a report that came out a couple of days ago from the OECD and it suggested that the drop in GDP for this year for the UK would actually be worse than for every other industrialised nation.

“So we’re in a very, very difficult situation as a country and we will need strong action to help us climb out of this as quickly as possible.”

The CBI tweeted: “Today’s data confirms that the economy was hit hard as it entered lockdown. Government has listened to business’ needs. Ongoing support should evolve with the situation & leave us well placed to build an ambitious vision for our economic recovery.”

Suren Thiru, head of economics at the British Chambers of Commerce, said: “With a monthly fall in UK GDP over 30 times the average month on month decline during the global financial crisis, the economic impact of Coronavirus has been put into sharp relief.

“With lockdown restrictions gradually easing and shops beginning to reopen, April is likely to prove to be the low point for the UK economy. However, any prospect of a ‘V-shaped’ recovery remains unlikely, with many sectors continuing to operate at reduced capacity.

“Some firms, including those in our hospitality, leisure and tourism industries, may remain closed for some time and will require flexible and open-ended government support to weather the economic storm.

“Over the coming months, further action will be needed to limit the long-term economic damage and kickstart a recovery, including close gaps in government support and providing incentives to help stimulate consumer demand and business investment.”


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