UK economy shrank by 1.5% in first quarter

The UK economy shrank by 1.5% in the first quarter of 2021, as the country experienced a lengthy winter lockdown.

School closures and a large fall in retail sales earlier in the quarter dragged down economic growth, said the Office for National Statistics.

The economy is now 8.7% smaller than where it was before the pandemic.

However, there was a strong recovery in March with the economy growing 2.1% boosted by retail spending and the return of schools.

"The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector," said Darren Morgan, ONS director of economic statistics.

However, the ONS said the construction industry had grown strongly and was now above its pre-pandemic level.

Chancellor Rishi Sunak said: "Despite a difficult start to this year, economic growth in March is a promising sign of things to come."

Confidence

Tej Parikh, chief economist at the Institute of Directors, predicted the UK economy is on course for a bumper bounce-back this year.

"The first quarter should mark the low point for the economy in 2021," he said. "The lockdown, and added costs of navigating new trading terms with the EU, limited many businesses' trading activities at the start of the year."

But the vaccine rollout, the extension of support measures at the Budget, and the roadmap to reopen the economy has helped build directors' confidence for the months ahead, he said.

This breaking news story is being updated and more details will be published shortly. Please refresh the page for the fullest version.

You can receive Breaking News on a smartphone or tablet via the BBC News App. You can also follow @BBCBreaking on Twitter to get the latest alerts.

Adblock test (Why?)

May 12, 2021 at 06:42PM

https://www.bbc.co.uk/news/business-57083394