Covid-19 pandemic has halted all growth and pushed back the U.K. economy where it was 8 years ago
According to the latest data released by Office for National Statistics (ONS), United Kingdom (U.K.), the economy shrank by 9.9% in 2020, reporting the worst figures in the past 30 years.
The pandemic has effectively wiped out all the growth and has brought the economy to a position where it stood in 2013.
The economists are optimistic that the economy will bunce back and there will be no double-dip recession. This is because in December 2020, the economy grew by 1.2%, after shrinking by 2.3% in November 2020.
Speaking on the occasion, the Deputy National Statistician of ONS – Jonathan Athow said, “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 [lockdown] restrictions in November.”
Taking it to twitter, he tweeted,
The economy returned to growth in December after shrinking in November, with output in December up 1.2%. The relaxation in restrictions in large parts of the country obviously helped here. (1/n)
— Jonathan Athow (@jathers_ONS) February 12, 2021
Despite strong growth through the second half of 2020, the economy at the end of December 2020 was still 6.3% smaller than in February 2020. The services sector saw growth in 11 of 14 sub-sectors between November and December 2020. The services sector acted as the main contribution to growth in December 2020, as a number of consumer-facing industries reopened following the easing of restrictions in December. The production sector grew marginally by 0.2% and is now 3.6% below its February 2020 level. The construction sector fell by 2.9% after reporting increase for 7 months. The construction sector is now 3.5% below the level of February 2020.
The Head of Economics at the British Chambers of Commerce – Suren Thiru 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.”
The Chancellor of the Exchequer, U.K. – Rishi Sunak said, “Today’s figures show that last year our economy experienced a significant shock, and also some signs of resilience over winter.”
He further added, “You know what’s clear is right now, many families and businesses are experiencing hardship. That’s why we’ve put in place a comprehensive plan for jobs to support people through this crisis, and we will set out the next stage of our economic response at our Budget in early March.”
Besides, the latest lockdown which was imposed on January 5, 2020, is expected to hit the economy hard in the first quarter of 2021. The difficulties arising out of new cross-border trade between U.K. and European Union (E.U.), will also add to the woes. British exporters are struggling to get their products into Europe due to border delays and glitches in new customs systems. Companies selling fresh produce, such as live shellfish and meat, have in some cases had to discard their products.
