The UK’s economy shrunk at its fastest rate since the 1920s last year, as the pandemic forced thousands of businesses to remain closed for several months.
The Office for National Statistics revealed that gross domestic product (GDP) dropped by 9.9%, the worst year for the UK economy since modern records began.
GDP was first measured in the aftermath of the Second World War, and the measure has never previously dropped by more than 4.1%.
GDP grew 1.2% in December but remains 6.3% below its pre-crisis peak.
▪️ Services grew 1.7% (6.9% below peak)
▪️ Manufacturing grew 0.3% (3.4% below peak)
▪️ Construction fell 2.9% (3.4% below peak)https://t.co/C11VwDib9D pic.twitter.com/Zbjl2ZJsn8— Office for National Statistics (ONS) (@ONS) February 12, 2021
Chancellor Rishi Sunak said the economy had suffered a serious shock from the pandemic.
“Today’s figures show that the economy experienced a serious shock as a result of the pandemic, which [is being] felt by countries around the world,” he said.
“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.”
The 10 worst years for UK GDP
1706: -15.3%
1709: -13.4%
1921: -10.1%
1919: -9.9%
2020: -9.9%
1710: -9.1%
1920: -7.7%
1703: -6.4%
1729: -5.6%
1737: -5.4%
However, after registering a 1.2% growth in December, despite strong restrictions across large parts of the country, the economy looks set to avoid what could have been its first double-dip recession since the 1970s.
A double-dip means two recessions within a short period of time, while a recession is defined as two consecutive quarters where the economy contracts.
ONS deputy national statistician for economic statistics Jonathan Athow said: “Loosening of restrictions in many parts of the UK saw elements of the economy recover some lost ground in December, with hospitality, car sales and hairdressers all seeing growth.
“An increase in Covid-19 testing and tracing also boosted output. The economy continued to grow in the fourth quarter as a whole, despite the additional restrictions in November.
“However, GDP for the year fell by nearly 10 per cent, more than twice as much as the previous largest annual fall on record.”
