The United Kingdom has disclosed that its economy suffered its biggest crash in output in more than 300 years in 2020 when it slumped by 9.9% following the negative effect of coronavirus on the nation’s business and other economic activities.
It explained that though its economy slumped, it avoided heading back towards recession at the end of the year and looks on course for a recovery in 2021.
Official figures showed gross domestic product (GDP) grew 1.0% from October through December, the top of a range of economists’ forecasts.
This makes it likely that Britain would escape two straight quarters of contraction – the standard definition of recession in Europe – even though the economy is set to shrink in early 2021 due to the effects of a third COVID lockdown.
“As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth Management.
Britain’s economy grew 1.2% in December alone, after a 2.3% fall in output in November when there was a partial lockdown, pointing to greater resilience to COVID restrictions than at the start of the pandemic.
That left output 6.3% lower than in February before the start of the pandemic, the Office for National Statistics said.
However, the Bank of England forecasts that the economy would shrink by 4% in the first three months of 2021 because of the new lockdown and Brexit disruption.
On his part, Britain’s finance minister, Rishi Sunak, said that “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,”
Sunak, facing the heaviest borrowing since World War Two, said he would continue to focus on protecting jobs when he sets out a new annual budget on March 3.
Unemployment has risen much less than feared at the start of the crisis, largely due to subsidies to keep people in work, though sectors such as hospitality and high-street retail remain hard hit.