Figures from the Office for National Statistics (ONS) found GDP fell 5.8 percent in March, services slumped by 6.2 percent and construction was hit by 5.9 percent – record monthly falls, while manufacturing also slumped 4.6 percent as the coronavirus firms its grip on the UK economy.
The first quarter fall was the worst since the end of 2008 at the height of the financial crisis, while the March monthly plunge marked a record tumble.
GDP fell by 2.0 percent in the three months to March 2020, following no growth in the three months to February, signalling the first direct impacts of the COVID-19 crisis on the economy.
Reacting to the figures, transport minister Grant Shapps said everyone would have expected a blow to the economy before warning there was more to come.
UK GDP has fallen to record lows
People working in construction have been allowed to return to work
He pledged that it was clear the UK would not go back to a period of austerity to pay for the economic measures taken during the pandemic.
Jonathan Athow, Deputy National Statistician for Economic Statistics, said: “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.
“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially.
UK GDP: Construction was hit by 5.9 percent
“Although very few industries saw growth, there were some that did including IT support and the manufacture of pharmaceuticals, soaps and cleaning products.
“The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China.”
Figures for April are likely to show an even bigger fall because the entire month was spent under lockdown by British companies and consumers.
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The UK has seen a gradual ease of its lockdown
Last week, the Bank of England said Britain’s economy could be heading for its sharpest annual slump in GDP in more than 300 years, saying a 14 percent fall was possible, followed potentially by a 15 percent rise in 2021.
The ONS said output in Britain’s giant services sector fell by a record 1.9 percent in the first quarter and there were also significant contractions in production and construction.
Ruth Gregory, an economist with Capital Economics, said: “Given that the economy was growing a quarterly rate of about 0.1 percent before the lockdown, today’s release therefore implies that economic activity after the lockdown was imposed on March 23 was down a whopping 21 percent.”
UK stages of easing the coronavirus lockdown
Clive Docwra, Managing Director of construction consulting and design agency McBains, said the “worst is yet to come”.
He said: “Today’s figures confirm the construction industry is facing its most challenging period since the 2008 financial crisis.
“The industry was more affected by the lockdown than most as the majority of work cannot be undertaken from home, meaning the pandemic has contributed to new work decreasing by 6.2 percent, including private housing falling by 6.4 percent and private commercial work plunging by 7.1 percent.
“What’s more, the worst is yet to come with the impact of coronavirus yet to be fully seen.
“While the Prime Minister has identified the industry as one that can now return, construction work cannot just simply pick up again because many supply chains – not only in the UK but also in the Far East – are still static as a result of the pandemic.
“The industry is also facing short-term labour shortages because many foreign construction workers that returned home as coronavirus took hold are reluctant to return given the impending Brexit. And there are challenges in firms operating while maintaining social distancing.
“Many small businesses in the sector are facing continuing pressure on their finances from the current suspension of projects, so the coronavirus loan process needs to be streamlined and faster decisions need to be made on loan approvals too.”
Published at Wed, 13 May 2020 06:12:00 +0000