UK economy collapses by a fifth on virus lockdown

By: AFP      Published: 04:14 PM, 12 Jun, 2020
UK economy collapses by a fifth on virus lockdown

Britain's economy shrank by more than a fifth in April from March, official data showed Friday, as the first full month of coronavirus lockdown ravaged activity.

Gross domestic product nosedived by a record 20.4 percent from the previous month, after a 5.8-percent contraction in March, the Office for National Statistics said. The UK government had imposed a lockdown on March 23 in an attempt to halt the spread of COVID-19, and also stepped in to back up employee wages in a costly "furlough" jobs retention scheme.

"GDP fell by 20.4 percent in the month, the largest fall since monthly records began in 1997, reflecting record widespread falls in services, production and construction output," the ONS added.

The dramatic collapse in April was three times greater than the slump experienced during the 2008-2009 global financial crisis, it said. Britain is now gradually easing stay-at-home restrictions, with widespread concern about the impact of two months of lockdown on the economy.


Yet the harsh restrictions -- under which shops and factories shut down and workers were sent home -- is widely expected to have sent the nation into recession.

Jonathan Athow, ONS deputy national statistician, described the 20-percent slump as "unprecedented". "April's fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-COVID-19 fall," said Athow. "In April, the economy was around 25 percent smaller than in February."

The hardest hit areas were pubs, education, health and car sales. GDP meanwhile shrank by 10.4 percent in the three months to the end of April. "The economy has experienced a significant shock since the start of the coronavirus pandemic; GDP has fallen dramatically, with record broad-based falls in output for production, services and construction," the ONS added.

'Wide-ranging impact'

The COVID-19 pandemic, which has blighted economies worldwide, had a "significant and wide-ranging negative impact" in April on British businesses.

"April 2020 has experienced sharper falls than March as the negative impacts of social distancing and 'lockdown' have led to a significant fall in consumer demand and business and factory closures, as well as supply chain disruptions," the ONS said.

Britain is meanwhile pressing ahead with its lockdown easing plans. Non-essential shops and services, as well as zoos, wildlife parks and drive-in cinemas can open from next Monday, and individual attendance will be allowed at places of worship.

However, restrictions have not yet been lifted on pubs, bars, restaurants and other leisure facilities. Britain is widely expected to slump into recession in the second quarter of this year, having contracted by two percent in the first three months of 2020.

The economy could collapse as much as 35 percent in the current quarter that runs to the end of June, according to UK fiscal watchdog the Office for Budget Responsibility. The Bank of England has already warned that the COVID-19 economic paralysis could lead to Britain's worst recession in centuries.

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