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Britain suffers record hit to GDP - inevitable coronavirus economic crisis

Britain’s economy has suffered the largest monthly contraction on record as the coronavirus sent mass swathes of the country into lockdown.

Image credit: Rabo Bank

Official figures released by the Office for National Statistics (ONS) today (Friday 12th June) show that gross domestic product (GDP) fell by 20.4% in April compared to March.

That marked the largest monthly fall since records began in 1997, with the ONS saying it reflected “record widespread falls in services, production and construction output”.

The latest data are the first to cover a full month of the coronavirus lockdown, with the ONS saying the impact of the curbs on many aspects of ordinary life had “led to a significant fall in consumer demand and business and factory closures, as well as supply chain disruptions“.

Sports, recreation, accommodation, food, and the cultural sectors have been significantly impacted, the ONS survey found, with at least 75% of businesses in these sectors saying they had “temporarily closed or paused trading”.

The concern is the scale of the economic downturn, the ONS added:

“The monthly decline in GDP in April 2020 is three times greater than the fall experienced during the 2008 to 2009 economic downturn.

"During the global financial crisis, from the peak in February 2008 to the lowest point of March 2009, a total of 13 months, GDP contracted 6.9%.

“Between March 2020 and April 2020, GDP has fallen by 20.4%, equivalent to a fall of approximately £30 billion in Gross Value Added.”

The service sector saw a 19% fall in April 2020, the figures show — again a monthly record, while the construction industry experienced a 40.1% decline.

James Smith of the Resolution Foundation economics think tank said: “Today’s release lays bare the devastating impact that the coronavirus crisis is having on the economy, with a fall in output more than nine times bigger than the previous record.

“But while this contraction is unprecedented, it is not unexpected. Shutting down large parts of our economy inevitably means big falls in economic activity.

“This is why the first priority for policy makers was to protect people and firms from that impact with significant policy announcements. But looking ahead, policy can shape how much lasting damage is done and this underscores the need for different, but equally bold, further economic policy measures in the months ahead.”

Source: Politics Home


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