Economy

UK suffers record 9.9% GDP slump

Figures show that GDP in December 2020 was 6.3% below the level of February 2020, having increased by 1.2% compared with November 2020

GDP declined by 9.9% in 2020, a figure which is more than double of what was recorded in 2009 after the UK’s financial crisis.

According to the ONS, the fall was largely due to restrictions which were in place for most of the year, forcing the economy to operate at limiting trading levels.

Figures show that GDP in December 2020 was 6.3% below the level of February 2020, having increased by 1.2% compared with November 2020.

Monthly gross domestic product GDP increased by 1.2% during December 2020 -as business restrictions were briefly lifted -but still remained 6.3% below February 2020 levels.

The services sector acted as the “main contribution to growth” in December, increasing by 1.7% as a number of consuming industries reopened. However the services sector is now 6.9% below the level of February 2020.

Suren Thiru, head of economics, British Chambers of Commerce, said: “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.

“Modest growth at the end of 2020 is set to be followed by a substantial fall in output in the first quarter of this year as the current lockdown, the unwinding of Brexit inventories and disruption to UK-EU trade flows combine to suffocate activity.”

He added: “While the vaccine rollout offers optimism, with the scarring caused by the pandemic likely to crystallise as government support winds down and the prospect of persistent post-Brexit disruption, any recovery may be slower than the Bank of England currently predicts.”

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