UK gross domestic product (GDP) is estimated to have fallen by 2.9% in January 2021, as government restrictions reduced economic activity.
Figures released this morning by the Office for National Statistics showed that falls in consumer-facing services industries and education drove a contraction of 3.5% in the services sector in January 2021.
Output in the production sector fell by 1.5% in January 2021, after manufacturing contracted for the first time (by 2.3%) since the initial pandemic-driven fall in output in April 2020.The construction sector grew by 0.9% in January 2021, driven by growth in new work.
January’s GDP was 9.0% below the levels seen in February 2020, compared with 4.0% below October 2020.
Alpesh Paleja, CBI Lead Economist, said:
“Activity fell in January as widely expected, with much of the UK entering some form of lockdown at the start of the year. However, the decline was notably smaller than the first lockdown in Spring 2020, demonstrating the growing ability of businesses and households to adapt to greater restrictions on mobility.
“Nonetheless, a year of repeated restrictions have taken their toll on growth, jobs, costs and wellbeing. There are reasons for optimism, with vaccine rollout proceeding at pace, and further financial support in last week’s Budget providing a bridge for firms to get to the other side.
“As we look towards recovery, the Government must now have a laser-like focus on the UK’s longer-term competitiveness by prioritising measures which stimulate jobs and skills growth, fulfil levelling-up ambitions and accelerate moves towards net zero.”
Anneliese Dodds MP, Labour’s Shadow Chancellor said:
“Today’s figures confirm that under the Conservatives we’ve had the worst economic crisis of any major economy.
“Rather than securing the recovery, Rishi Sunak’s budget last week risked weakening it through a combination of pay cuts and tax rises, and a looming cut to social security just as unemployment is set to spike.
“The Chancellor’s mask has slipped. He’s making irresponsible choices now and has no long-term plan for the future. The people of Britain deserve better.”
