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UK economy shrank 2.9% in January after lockdown measures hit economy
12 March 2021, 07:19 | Updated: 12 March 2021, 14:49
UK gross domestic product (GDP) fell 2.9% in January following growth of 1.2% in December as new lockdown measures hit the economy, the Office for National Statistics (ONS) has said.
It follows the national lockdown measures imposed shortly after Christmas, once again shutting down high streets, pubs and leisure centres.
But it is a better forecast compared to what was expected - a downturn of around 4.9%.
ONS Deputy National Statistician for Economic Statistics, Jonathan Athow, said: “The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown.
“Manufacturing also saw its first decline since April with car manufacturing falling significantly.
“However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries."
It follows figures in February which show at least 200,000 jobs have been lost since the beginning of Covid-19 measures in March 2020.
Fears remain over the significant job losses and business closures in industries most affected by the pandemic - particularly retail and hospitality.
More than a million workers in the hospitality industry are still furloughed and it is expected many businesses are planning to make staff redundant in the next three months.
Yesterday, major high street retailer John Lewis warned more of its department stores may not reopen after lockdown restrictions are lifted following a pre-tax loss of £517 million in the past year.
Figures also revealed a sharp decrease in the number of exports, with ONS figures revealing a 40.7% plunge in the export of goods to the EU after the Brexit transition period came to an end on 31 December.
Almost £5.6 billion was lost in exports worldwide in January.
Mr Athow added: “Both imports and exports to the EU fell markedly in January with much of this likely the result of temporary factors. Returns from our more timely surveys and other indicators suggest trading began to recover towards the end of the month.”
Imports to the UK also fell by £8.9 billion - most of which was from the bloc.