UK GDP fell by a fifth in April – the biggest drop since records began
April 2020 – the first month after coronavirus lockdown was introduced – experienced a sharper fall than March (-5.8%) as the effect of social distancing and lockdown rippled through the economy.
The Office for National Statistics (ONS) revealed GDP fell 20.4% in the month, the largest fall since the monthly records began in 1997, reflecting widespread falls in services, production and construction output. This is the equivalent to £30bn wiped off the economy.
The figure is three times greater than the fall experienced during the 2008 to 2009 economic downturn. During the global financial crisis, from the peak in February 2008 to the lowest point of March 2009, a total of 13 months, GDP contracted 6.9%.
Breaking the figures down into industries, the ONS said some were less affected by Covid-19 than others, with the services sector experiencing a 19% fall, air travel contracting 93%, arts and entertainment declining 51% and the accommodation sector fell 87%.
The latest industrial and manufacturing production data also shows a downward trajectory, dropping 20.3% and 24.3% respectively.
‘Worst is now behind us but will be remembered for years’
Chris Bailey, European strategist at wealth management firm, Raymond James, said: “A historically bad day for UK economic data, and one we’ll still be talking about a hundred years from now. This 20.4% GDP fall in April follows the 5.8% drop in March, meaning that a quarter of the UK’s economic output simply vanished overnight as the country went into lockdown.
“To put that in perspective, that’s the entire contraction of economic activity seen during the 2008/9 recession, multiplied by three, condensed into a matter of weeks. Whilst the numbers are certainly headline-grabbing, we can be fairly confident that the worst is now behind us, so long as the country’s reopening does not lead to another spike in COVID-19 cases to rival the first.”
Bailey added that today’s grim figures highlight the biggest challenge facing policymakers: encouraging all participants in the economy to return to their pre-pandemic activities, while significant uncertainty lingers.
“A bit of optimism can go a long way, and rebuilding the animal spirits of consumers, businesses and entrepreneurs remains critical. The UK is not alone in facing such challenges but the internationally open nature of the economy, ongoing Brexit discussions, and some stubborn Covid-19 data make the UK’s clawback of past performance a little more exacting,” he said.