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Summary
- The UK economy recorded the largest-ever annual dip of 9.9 per cent in GDP due to pandemic-related uncertainties in 2020.
- The UK GDP is still 7.8 per cent below the levels recorded at the end of fourth quarter of 2019, even after two successive quarters of growth.
The UK economy recorded the “largest-ever” annual fall with the GDP slipping by 9.9 per cent in the pandemic-laden calendar year, as per latest figures from the Office for National Statistics. The UK GDP saw a growth of 1 per cent in the October-December quarter of 2020 as the nation drifted from relaxations to three-tier system, with multiple businesses shutting down in various authorities.
With the Covid-induced inertia amid the businesses and the extensively dampened consumer demand throughout the year 2020, the UK GDP recorded an annual de-growth of 9.9 per cent in 2020.
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According to the data released by the Office for National Statistics, the Q4 2020 GDP grew at a pace of 1 per cent, topping the revised expansion of 16.0 per cent in the July-September period of 2020.
On a monthly basis, the GDP rose by 1.2 per cent in December as against a drop of 2.3 per cent in November 2020.
The GDP estimates for Q4 2020 are subject to more uncertainty than usual, the ONS said in a statement. Going forward, there can be larger than usual revisions in the GDP estimates in the subsequent releases, it added.
Also Read: Is the UK economy poised for a sharp turnaround?
The UK GDP is still 7.8 per cent below the levels recorded at the end of fourth quarter of 2019, even after two successive quarters of growth. With the biggest ever annual drop in the GDP, the economic recovery might stretch to several quarters as the world is yet to come up with the conclusive answer to the biggest problem of recent times, Covid-19 pandemic.
UK GDP: Points to note
- The ONS has been particularly uncertain around the income approach for measuring the GDP as there were unprecedented impacts and interventions in the economic cycle.
- The monthly estimates of the GDP in the October-December quarter clearly indicate that the different degrees of restrictions with October and December emerging as positive, while in November GDP slipped by 2.3 per cent.
- The output of services, production and construction sectors remained below their respective levels seen in Q4 2019. However, a sequential increase was recorded.
- October saw a marginal growth of 0.6% as tightened Covid-19 restrictions adversely impacted the trade and already hammered consumer demand.
- Following this, November witnessed a contraction of 2.3 per cent largely due to the nationwide increase in the restrictions after the administration introduced and extended the tier system in different parts of the country.
- Accommodation and food service activities, the sector which dragged the economic growth in October and November, supported the GDP in December, emerging as the largest contributor to the increase in GDP.
- A large part of swelled consumer demand in the month of December can be attributed to the festive season with the shoppers rushing to store for Christmas and New Year.
- The UK has been the only nation that has managed to record a 1 per cent growth in GDP for the last quarter of 2020 as compared to Italy, Germany, France and Spain.
- As per the ONS, there have been differences in methodologies in estimating the output of health and education services across the countries.
