Wealth Management News

UK economy shrinks by nearly 10 per cent in 2020

The latest figures from the Office for National Statistics (ONS) show that the UK economy, as recorded by gross domestic product (GDP), fell by 9.9 per cent during the last year.

This is a record yearly contraction and more than twice as much as the previous largest annual fall on record, making it the country’s worst annual economic year since 1709.

The decline in the UK economy was a direct result of the pandemic and the restrictions it has placed on many sectors.

While the figures for the last year paint a very bleak picture, the latest figures for December show that GDP increased by 1.2 per cent.

The services sector was the main contributor to growth in December, increasing its contribution to GDP by 1.7 per cent, as many consumer-facing industries reopened following the easing of restrictions.

Production in manufacturing grew marginally by 0.2 per cent, while the construction sector acted as the biggest drag, dropping 2.9 per cent in December having previously recovered in the preceding months.

This small growth in the economy has allayed fears of a double-dip recession, but the true impact of the current restrictions imposed since January and the effect of Brexit are not yet evident in the official figures.

However, with plans for the UK to now come out of lockdown in the months to come under the Government’s new roadmap, there is hope that the economy can bounce back.

Link: Coronavirus and the impact on output in the UK economy