UK economy suffers “worst fall in 300 years”
The UK economy shrank by a record 9.9 per cent last year as coronavirus restrictions forced thousands of businesses to close, official statistics have revealed.
Despite representing the biggest annual crash in output in more than 300 years, the UK narrowly avoided a recession and looks to be on course for a recovery in 2021.
The figures form part of the Office for National Statistics’ (ONS) monthly economic update for the year to December 2020.
According to the report, gross domestic product (GDP) declined by 9.9 per cent in 2020 – more than double that recorded after the 2008 economic crash and the worst on record since the “Great Frost” of 1709.
Only the Spanish economy suffered more at the hands of the coronavirus pandemic, with its economy shrinking 11 per cent over the same period.
But monthly figures for December show that GDP bounced back by 1.2 per cent, with the UK’s huge services sector growing by 1.7 per cent following the easing of restrictions.
GDP in the fourth quarter (October to December) as a whole rose one per cent, meaning the UK has avoided a recession – defined as negative economic growth for two consecutive quarters.
But experts predict the economy to shrink again during the start of 2021 as the effects of the third national lockdown come to light, before recovering later in the year.
Commenting on the report, ONS deputy national statistician Jonathan 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.”
Suren Thiru, the head of economics at the British Chambers of Commerce, added: “Despite avoiding a double-dip recession, with output still well below pre-pandemic levels amid confirmation that 2020 was a historically bleak year for the UK economy, there is little to cheer in the latest data.”
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