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UK economy shrinks less than first feared after second national lockdown, economists reveal

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UK economy shrinks less than first feared after second national lockdown, economists reveal

The UK economy shrunk less than first feared during the second national lockdown, a major report has revealed.

But the Office for National Statistics (ONS), who published the figures, said the economy is likely to decline again before it recovers.

According to the research, gross domestic product (GDP) fell by 2.6 per cent in November 2020 – 8.5 per cent below the level of February 2020 – following the launch of the second national lockdown in England and tighter restrictions in Scotland, Wales and Northern Ireland.

While ending six months of consecutive growth, economists had forecasted a sharper monthly fall of 5.7 per cent, suggesting business has remained largely resilient.

However, the ONS statisticians warned of a second successive fall this month following the launch of the third national lockdown, forcing all but essential businesses to close.

The figures suggest that businesses forced to close for much of the year – such as the services sector (representing 80 per cent of the economy) and the drinks and hospitality industry – experienced the largest impact. The services sector, for example, fell by 3.4 per cent and is 9.9 per cent below the level of February 2020.

The UK’s manufacturing and production sector continued to operate throughout the lockdown, however, which is reflected by a fall of just 0.1 per cent over the same period. The construction sector, meanwhile, continued to grow at a rate of 1.9 per cent.

The report comes after the largest fall in GDP since records began in April 2020, which saw the UK economy as a whole shrink by some 18.8 per cent.

Click here to access the ONS report.

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