The pandemic has effectively wiped out all growth in UK over the last seven years, returning the economy close to the size it was in 2013, reports Asian Lite News
The UK economy has suffered its biggest slump in more than three centuries last year, with GDP falling by nearly 10 per cent over the course of 2020.
This means that the Covid-19 pandemic has effectively wiped out all growth in the United Kingdom over the last seven years, returning the economy close to the size it was in 2013.
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The 9.9 per cent slump in the UK GDP was “less severe than expected” but it surpassed the 9.7 per cent slump experienced during the Great Depression in 1921, “making it the worst annual drop since 1709”, according to a Bank of England database. That was when Europe’s harshest winter in 500 years caused widespread death and destruction.
“This time it’s a pandemic to blame whereas back then, it was a Great Frost, which saw ice in the North Sea, and the War of Spanish Succession … which was doing the damage,” wrote Societe Generale strategist Kit Juckes in a research note on Friday as quoted by CNN.
According to the Office for National Statistics, there were some signs of improvement in the final months of 2020, with GDP estimated to have increased by 1 per cent in the fourth quarter, following record growth in the third quarter.
But there were big swings in output between October and December, largely tracking the level of restrictions imposed to contain the coronavirus, CNN reported.
The UK suffered one of “the worst recessions” among major economies last year.
Germany, for example, held up better in the pandemic than it did during the global financial crisis. Provisional estimates suggest Europe’s biggest economy contracted by 5 per cent last year. EU GDP, meanwhile, is expected to have shrunk 6.4 per cent, according to Eurostat.
“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” UK Finance Minister Rishi Sunak said in a statement as quoted by CNN.
“While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses,” it added.
The new national lockdown, which was imposed on January 5 in the country, is expected to hit the economy hard in the first quarter of 2021, reversing the return to growth in the fourth quarter of 2020.
“It seems that a double dip [recession] was merely delayed rather than avoided outright,” Sam Miley, an economist at the London-based Centre for Economics and Business Research said in a note on Friday.