UK economy shrinks by a fifth in fastest monthly contraction on record
Valentina Romei in London
The UK economy in April shrank by more than a fifth, the fastest monthly rate on record, as lockdown measures hit demand and activity in all major sectors.
Output in the UK fell by 20.4 per cent in April, compared with the previous month, the Office for National Statistics said on Friday. This is by far the largest contraction since records began in 1997 and it follows a 5.8 per cent contraction in March, the previous record fall.
“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost 10 times larger than the steepest pre-Covid-19 fall,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS. “In April, the economy was around 25 per cent smaller than in February”.
The fall exceeds the 18.4 per cent contraction forecast by economists polled by Reuters.
“In line with many other economies around the world, coronavirus is having a severe impact on our economy,” said the UK chancellor Rishi Sunak.
The lifelines we’ve provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs – giving us the best chance of recovering quickly as the economy reopens.
April’s fall in output is steeper than the downturn during the financial crisis, when the fastest contraction was a monthly fall of 1 per cent in March 2009. It far exceeds the 6 per cent cumulative output lost during the one-and-a-half years of economic contraction during the financial crisis.
April’s record monthly drop reflects a full month of lockdown measures, with extensive business closures and consumers asked to remain indoors. It pushed the figures for the three months to April to a contraction of 10.4 per cent over the previous three months, another record low since 1997.
All major sectors registered a sharp fall. Output in the services sector, which accounts for about 80 per cent of the economy, fell by 19 per cent in April compared with the previous month. Services, particularly accommodation, food services, travel, retail and entertainment, have been the hardest hit with most of the businesses having to close during the lockdown.
Industrial production shrank by 20.3 per cent, while construction registered a 40.1 per cent monthly fall.
Economists expect April’s contraction to be the sharpest of the crisis, but the recovery to be slow. The OECD this week forecast a deeper recession in the UK than in most other advanced economies.