The economy of the United Kingdom shrank to its joint largest fall since 1979, according to official figures, with a contraction of 2.2 per cent in the January to March quarter. This drop was more than was initially expected.
Its previous estimate a 2 per cent contraction for the economy was further revised down by the Office for National Statistics (ONS) with all the major economic sectors being tailed down.
The figures were disclosed even while UK prime minister set out a plan or reopening f the country after the lockdown imposed to curb the spread of the novel coronavirus pandemic. There would be investment in infrastructure and schools, said Boris Johnson in a speech in Dudley, in the West Midlands.
“Our more detailed picture of the economy in the first quarter showed GDP shrank a little more than first estimated. Information from government showed health activities declined more than we previously showed. All main sectors of the economy shrank significantly in March as the effects of the pandemic hit,” said Jonathan Athow, deputy national statistician at the ONS.
The contraction in the first quarter for the UK economy is now the joint biggest drop for it since the July-to-September quarter in 1979.
“The sharp fall in consumer spending at the end of March led to a notable increase in households’ savings,” Athow said. According to the new data, there was a 6.9 per cent contraction in the GDP in the m month of March.
There was a record contraction of 2.3 per cent in the services sector during the first quarter which hit the economy hard because this sector makes up about three-quarters of GDP of the country.
During the quarter, there was a revised drop of 1.5 per cent in production output, the ONS said, because of drop in manufacturing because of the temporary shutdown of factories because of the Covid-19 pandemic restrictions. Output in construction sector also fell by 1.7 per cent.
The lockdown because of the pandemic was implemented only on March 23 and therefore figures for the second quarter for the economy will reflect the complete hit of the pandemic on the economy.
There was a contraction of 20.4 per cent of the UK economy in April, according to recent ONS monthly figures, which marked the highest ever single month contraction of the economy since records were maintained. The anticipated contraction in April was three times as large as the contraction experienced by the economy during the whole of the 2008 to 2009 economic meltdown.
Now considering the first quarter contraction was the worst for the UK economy in the last 41 years, it was just one tenth of what the economy possibly has contracted by in the month of April.
The latest figures could be summed up in one line: “The biggest contraction for 40 years, even though Q1 contained just nine lockdown days,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. He added that that the data “was just the prelude” and worse was yet to come.
(Adapted from BBC.com)