Figures from the Office for National Statistics (ONS) show that January’s GDP was 9% below the levels seen in February 2020, compared with 4% below October 2020 (the initial recovery peak).

Lockdown restrictions were in place to varying degree across all four nations of the UK during January.

Overall, all main sectors of GDP remained notably below their pre-pandemic (February 2020) levels and all were lower than in October 2020.

However, the fall of 2.9% in GDP was better than the figure of nearer 5% expected by economists.

The services sector acted as the main drag on growth in January, decreasing by 3.5% as restrictions on activity were reintroduced in response to the coronavirus pandemic. The services sector was 10.2% below the level of February 2020 compared with 4.9% below the level seen in October 2020.

Derrick Dunne, CEO at Beaufort Investment, said: “With non-essential retail shut, schools off-limits to almost all pupils and hospitality a distant memory, the services sector was always due to be a drag on numbers – and indeed it was, with a month-on-month decline of 3.5%. Production and construction fared relatively well, with a fall of only 1.5% and growth of 0.9% respectively. But these were merely brighter spots in an otherwise gloomy picture.

“In a very real sense, the events of 2020 continue to haunt the economy, with GDP still 9% below its pre-pandemic levels. But savers and investors should avoid being spooked by today’s data, resist rash decisions, and focus instead on ensuring that their plans continue to serve their long-term goals once the recovery begins.”

Kevin Brown, savings specialist at Scottish Friendly, said: “It’s uncertain how this will affect GDP over the remainder of Q1 but the roadmap out of lockdown provides hope of a healthy bounce back from April onwards.

“We expect a household spending boom throughout spring and summer which could help push the UK’s economic output back above pre-pandemic levels. This will provide a much-needed shot in the arm for many businesses but it could potentially hurt some households in the long-run.

“If inflation rises sharply above the Bank of England’s 2% target then families who have savings held in bank of building society accounts will see the value of their cash quickly eroded. We need to keep a watchful eye on the rate of consumer spending from April onwards to ensure that households don’t pay the price for driving the UK economy forward.”