UK economy suffered record annual slump in 2020

The UK economy shrank by a record 9.9% last year as coronavirus restrictions hit output, the Office for National Statistics (ONS) says.

The contraction in 2020 "was more than twice as much as the previous largest annual fall on record," said ONS deputy national statistician Jonathan Athow.

In December, the economy grew by 1.2%, after shrinking by 2.3% in November, as some restrictions eased.

Hospitality, car sales and hairdressers recovered some lost ground.

Last month's growth means the UK economy looks set to avoid what could have been its first double-dip recession since the 1970s.

A double-dip means two recessions within a short period of time, with a recession generally defined as two consecutive quarters where the economy contracts.

Mr Athow said: "An increase in Covid-19 testing and tracing also boosted output. The economy continued to grow in the fourth quarter as a whole, despite the additional [lockdown] restrictions in November."

In the October-to-December quarter, the economy grew by 1%.

GDP was first measured in the aftermath of the Second World War, and the measure has never previously dropped by more than 4.1% in a year.

Chancellor Rishi Sunak said: "Today's figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world.

"While there are some positive signs of the economy's resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses.

"That's why my focus remains fixed on doing everything we can to protect jobs, businesses and livelihoods."

As expected the economy stabilised in the last quarter of 2020. But the latest set of statistics confirm the scale of the hit over the whole of last year.

A technical return to recession has been avoided, with the economy returning to growth at the end of last year. But the economy is certainly falling again so far in the first three months of 2021, due to the tough national lockdowns, as well as some impact from increased trade barriers with the European Union.

The chancellor and Bank of England will be paying much more attention to what is going on right now. The renewed lockdown has hit growth considerably again, but not as hard as last April.

Businesses and households remain in holding pattern ready to unleash pent up growth when the economy is reopened.

While the vaccine will eventually unlock that growth, the precise timing is still uncertain, and the government remains under pressure to maintain significant sums in economic support.

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February 12, 2021 at 07:50PM

https://www.bbc.co.uk/news/business-56037123