The U.K. economy contracted by 9.9 percent, the largest annual fall on record.
Figures out this morning by Office for National Statistics showed that gross domestic product in the fourth quarter of 2020, from October to December, is estimated to have grown by 1 percent, following revised 16.1 percent growth in the third quarter.
However the ONS notes that despite two consecutive quarters of growth, the level of GDP in the U.K. is 7.8 percent below its Quarter 4 2019 level
Alpesh Paleja, CBI Lead Economist, said:
“The UK economy grew slightly towards the end of the last year, as a second lockdown in November was partly offset by a pick-up in GDP over December. But with restrictions tightening again in the New Year, we’ll likely see further dips in activity.
“Getting the pandemic under control is critical to our recovery, and speedy rollout of vaccines gives us some hope. But until this ends the stop-start cycle of lockdowns, businesses will need support to continue in parallel with restrictions.
“The Budget comes at a critical time for the UK. Extending the furlough scheme through to summer and continuing the business rates holiday for another three months will help safeguard jobs, livelihoods and communities across the country.”
“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.
At the Budget I will set out the next stage of our plan for jobs, and the support we’ll provide through the next phase of pandemic.” said the Chancellor Rishi Sunak
Anneliese Dodds MP, Labour’s Shadow Chancellor, responding to new GDP figures that show the UK economy shrank by a record 9.9% last year, said:
“These figures confirm that not only has the UK had the worst death toll in Europe, we’ve experiencing the worst economic crisis of any major economy.
“Businesses can’t wait any longer. The Chancellor needs to come forward now with a plan to secure the economy in the months ahead, with support going hand-in-hand with health restrictions.
“We need a smarter furlough scheme that offers certainty beyond April, alongside an extension to the business rates holiday and the vital VAT reduction for hospitality and tourism to give businesses breathing space.
“This crisis has pulled back the curtain on the Conservatives’ insecure economy. We need to rebuild stronger, putting in place the foundations for a better, more secure future.”
Dr Ivan Petrella, Associate Professor of Economics at Warwick Business School, said:
“It is no surprise to see the ONS confirm that the contraction in economic activity in 2020 was the largest in UK history. That is in line with what has happened internationally.
“This slump has been exceptional, not only because it is the largest in history, but because it is very different in nature than any other recession. It is important we keep this in mind when we think about the most likely path to recovery this year.
“Whereas free movement is often associated with economic growth, the key driver of economic activity this year is to be found in policies imposing severe limitations on movement to contain the virus.
“While the indicators suggest that we will see the economy continue to contract during the first quarter of this year, the rollout of the vaccination programme means we can now foresee a return to normal and economic recovery.
“That recovery is likely to be quite robust in the short run, which reflects in part the pent-up demand in many sectors of the economy that were most affected by lockdown.
“However, looking beyond the next couple of quarters, a great deal of uncertainty remains. Many business and jobs will not be there when the economy picks up again. Appropriate macroeconomic policies from the government will be key in making sure that the recovery will be sustained.”
