UK GDP's 'biggest ever fall' during first full month of lockdown

12 June 2020, 07:08

With shops and business forced to closed UK GDP plunged
With shops and business forced to closed UK GDP plunged. Picture: PA
EJ Ward

By EJ Ward

The UK economy contracted as gross domestic product (GDP) plunged by 20.4% in April - the first full month of lockdown - the Office for National Statistics (ONS) has said.

The ONS said that with the impact of the lockdown economic activity was down by 20.4 per cent in the largest single-month drop since records began in 1997.

The fall is significantly higher than March when activity was down 5.8 per cent that the ONS reported last month.

It means that GDP fell by 10.4% in the three months to April and sets the UK on course for one of its worst quarters in history.

May's GDP figures are also likely to be bad before things start to ease again in June as the economy slowly reopens.

The news comes after the country was plunged into lockdown on March 23 due to the ongoing impact of coronavirus, Prime Minister Boris Johnson addressed the nation and told people they must stay inside and only leave the house when absolutely necessary.

Experts had been expecting April's GDP to contract by 18.7%, according to a consensus compiled by Pantheon Macroeconomics.

Financial commentator David Buik told LBC he was "not expecting this" he branded the drop "quite a blow" and a "wake up call" to the full impact of the coronavirus crisis.

He said, "we need to get this economy going."

Health minister Edward Argar has claimed the "significant contraction" in the UK economy announced on Friday is "comparable" with other western European economies.

This comes despite the Organisation of Economic Co-operation and Development (OECD) projection on Thursday that the UK economy will be the worst hit by the pandemic.

Mr Argar said: "We're in roughly the same place as comparable western European economies like France, Spain and Italy, but it's clearly a very significant contraction of our economy."

He added the Government's furlough scheme is "one of the most generous and, I believe, effective schemes of financial support for individuals and businesses in the world".

Mr Argar said reopening businesses would help boost the economy in the coming weeks and the two-metre rule will be "under constant review" as the hospitality sector resurfaces.

The fall in GDP due to the coronavirus lockdown is "unprecedented", the Office of National Statistics (ONS) has said

Jonathan Athow, deputy national statistician at the ONS, told BBC Radio 4's Today programme: "Well, 20% is really unprecedented.

"Actually, if you take March and April together the fall was 25%. So in two months the economy shrank by a quarter."

Mr Athow said: "The biggest fall we have seen before was just over 2% - so, it's ten times the size of the largest fall we have seen before the coronavirus.

"Virtually every sector has been shrinking."