he UK financial system suffered a steeper contraction in the course of the first coronavirus lockdown however bounced again extra strongly than beforehand thought on the finish of 2020, in line with official figures.
The Workplace for Nationwide Statistics (ONS) mentioned gross home product (GDP) – a measure of the scale of the financial system – shrank by much more than first forecast between April and June final 12 months – plummeting by 19.5% towards the 19% preliminary estimate.
Nevertheless, in a raft of revisions to earlier figures, the ONS mentioned the financial system rebounded by 16.9% and 1.3% within the third and fourth quarters of 2020 respectively.
This marked steep will increase on the 16.1% and 1% earlier estimates.
The widespread revisions left GDP plummeting by 9.8% total in 2020, towards the 9.9% first pencilled in, however nonetheless the worst annual efficiency for greater than 300 years.
Jonathan Athow, deputy nationwide statistician on the ONS, mentioned: “Our revised quarterly figures present the financial system shrank a bit greater than beforehand estimated within the preliminary levels of the pandemic, earlier than recovering barely extra strongly within the second half of final 12 months.
“Nevertheless, these new estimates paint the identical total image as earlier than, with traditionally giant falls in GDP within the spring, adopted by a restoration in the summertime and autumn.”
As a result of upward revision to figures for the ultimate three months of 2020, the extent of GDP was 7.3% beneath that of a 12 months earlier, towards a earlier estimate of seven.8%, in line with the ONS.
The 9.8% annual drop marks the steepest since official information started, whereas historic figures from the Financial institution of England counsel it’s the largest contraction because the Nice Frost of 1709.
However the ONS confused that its GDP estimates are “topic to extra uncertainty than common” and more likely to have larger-than-normal revisions as a result of challenges of accumulating knowledge within the pandemic.
The UK financial system suffered among the many largest contractions of all of the nations within the Organisation for Financial Co-operation and Improvement (OECD), with solely Spain and Argentina seeing steeper falls.
Latest month-to-month figures from the ONS additionally present that the third English lockdown despatched GDP plunging 2.9% in January, although this was higher than feared by consultants.
Howard Archer, chief financial adviser to the EY Merchandise Membership, mentioned he’s now pencilling in successful of simply over 1% total within the first quarter of 2021, in contrast with 3.4% beforehand forecast because the financial system proves extra resilient to lockdown disruption.
He added that knowledge within the newest ONS launch exhibiting an increase within the family financial savings ratio to 16.1% between October and December and a document 16.3% over 2020 “suggests shoppers total are in a superb place to spend as restrictions ease via the second quarter”.
In separate figures additionally launched on Wednesday, the ONS mentioned the UK present account deficit – the distinction between the worth of the products and providers the UK imports and the products and providers it exports – widened to £26.3 billion within the fourth quarter of 2020.
That is equal to 4.8% of Britain’s GDP and is sort of twice the extent seen within the earlier three months as corporations stockpiled imports forward of the December 31 Brexit deadline.