Coronavirus: British economy suffers worst quarter since 2008
Wednesday, 13 May 2020
The United Kingdom’s Gross Domestic Product (GDP) suffered a 2% drop in the first quarter due to the coronavirus crisis, the Office for National Statistics Office (ONS) said on Wednesday.
GDP is the total value of all finished goods and services produced domestically. The drop, calculated compared to the previous quarter, is the worst performance since the fourth quarter of 2008, in the midst of the global financial crisis, according to the ONS.
In March alone, GDP declined by 5.8%, the worst month-on-month decline since data collection began in 1997.
This is only a foretaste of the impact of the pandemic, since the country’s lockdown, and thus the halt in economic activity, began on 23 March, at the end of the quarter.
The UK can expect a historic recession, as the impact of the pandemic should be much more significant in the second quarter.
With a 2% drop in GDP in the first quarter, the country is doing slightly better than France (-5.8%) or Italy (-4.7%), two other countries that were heavily affected by the pandemic but where the lockdown had started earlier.
The paralysis of the economy has led to both a plunge in household consumption and business investment in the first quarter, ONS said.
Virtually every segment of the economy was affected in March, according to ONS statistician Jonathan Athow. IT support and pharmaceuticals were among the few sectors to grow.
The UK economy was already in a weak position, having experienced zero growth in the fourth quarter as it moved towards Britain’s exit from the EU, which took place at the end of January.
The Office for Budget Responsibility (OBR), the public institute that publishes estimates on behalf of the government, fears a 35% drop in GDP, and the Bank of England (BoE) fears a 25% drop.
A BoE official, Gertjan Vlieghe, had mentioned in April the worst recession “for several centuries,” with the financial institution forecasting a fall in GDP of 14% for the whole of 2020.