The United Kingdom’s Office for National Statistics (ONS) has announced that the country’s economy suffered its biggest annual drop in more than 300 years, with GDP falling by 9.9% over the course of 2020.
This according to the ONS means the Covid-19 pandemic has effectively wiped out all growth in the United Kingdom over the last 7 years, returning the economy close to the size it was in 2013.
The 9.9% slump in UK GDP was less severe than expected but still surpassed the 9.7% collapse experienced during the Great Depression in 1921, making it the worst annual drop since 1709, according to a Bank of England database. That was when Europe’s harshest winter in 500 years caused widespread death and destruction.
The ONS said there were some signs of improvement in the final months of 2020, with GDP estimated to have increased by 1% in the fourth quarter, following record growth in the third.
UK Finance Minister Rishi Sunak said in a statement 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.
“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.”
Rishi Sunak
The new national lockdown in the United Kingdom, imposed on January 5, is expected to hit the economy hard in the first quarter of 2021, reversing the return to growth in the fourth quarter of 2020.
“It seems that a double dip [recession] was merely delayed rather than avoided outright,” Sam Miley, an economist at the London-based Centre for Economics and Business Research said in a note on Friday.
Disruption to EU-UK trade following the end of the Brexit transition period on December 31 is also weighing on activity.
British exporters have struggled to get their products into Europe due to border delays and glitches in new customs systems. Companies selling fresh produce, such as live shellfish and meat, have in some cases had to discard their products as a result.
A survey by the Financial Conduct Authority (FCA) published on Thursday, 11th February stated that the pandemic has left more than a quarter of British adults financially vulnerable, with too much debt or not enough savings to cope with a “negative life event” such as redundancy, loss of working hours, or ill health.
The survey also found that nearly 40% of British adults suffered financially as a consequence of the pandemic, with younger workers, Black people and the self-employed among the hardest hit.
But half of adults in the FCA survey said the pandemic had not disturbed their finances, while some 15% of adults were financially better off. That could lay the foundation for a “savings-led boost to demand”, according to Bank of England Chief Economist Andy Haldane, who pointed to high savings rates among UK households.
“The rapid rollout of the vaccination programme across the UK means a decisive corner has been turned in the battle against Covid-19. A decisive corner is about to be turned for the economy too, with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring.”
annual annual
