UK Economy Plummets by 20.4% in April
The staggering drop in Britain’s GDP is the biggest monthly hit on record due to the Coronavirus lockdown.
On the night of 23rd March 2020, the government informed the nation that the UK would be put into lockdown, so that more could stay at home in an attempt to reduce the spread of the Coronavirus outbreak.
With lockdown measures being relaxed in May, the UK experienced a full month of lockdown restrictions during April, with many businesses remaining closed, people following social distancing rules and being unable to work, and therefore, suffering financially as a result. This has all inevitably made the UK economy fall dramatically, as with many other countries across the globe.
The Office for National Statistics (ONS) presented the Gross Domestic Product (GDP) figures on 12th June, stating that April had “the largest fall since monthly records began in 1997, reflecting record widespread falls in services, production and construction output”, with a drop of 20.4% - “approximately £30 billion in Gross Value Added.”
The ONS also states that April’s GDP is 3 times worse than the drop that occurred during the 13-month economic downturn between 2008 and 2009.
What parts of the economy had the biggest impact?
According to the ONS report, the following UK sectors and job industries were significantly hit as a result of the Coronavirus (Covid-19) pandemic:
- Manufacturing and production
- Food and beverage (pubs and restaurants)
- Education (public, private and universities)
- Car industry (manufacturers and sales)
- Motion picture, cinema screenings and TV industry
- Passenger numbers in the transport sector
- Air transport
- Veterinary industry
- Hairdressers and beauty salons
Here are some of the sectors that weren’t as badly hit by the Covid-19 crisis:
- Postal and courier services (thanks to online shoppers)
- Accommodation (rooms were supplied to key workers)
- Computer programming and consultancy etc. (boosted by the number of people working from home)
- Real estate (despite house sales being very low, the main turnover came from renters)
- Funeral directors saw a slight increase in the number of funerals
Are we over the worst?
The deputy national statistician for economic statistics at the ONS, Mr Jonathan Athow, stated:
“It’s highly likely April will be the low point. Our own surveys and wider indicators suggested a pick-up in economy activity, but I think it’s really too early to know how quickly economic activity will recover in the coming months.”
There is hope, however, that while the UK has suffered a significant economic crash, we may be able to get over this soon, with Chancellor Rishi Sunak stating:
“The lifelines we’ve provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs - giving us the best chance of recovering quickly as the economy reopens.”
For more information on the government financial schemes, read our guides:
The UK to face profound recession
During the financial crisis that occurred in 2008 and 2009, the UK’s GDP reduced by 6.9% over 13 months, while the unprecedented fall experienced in April this year was 3 times more than that.
The first 3 months of 2020 already started to see a plummet, with a 2% contraction during that period, so we are well and truly on the way to experiencing a deep recession.
The term itself is highly likely to spark fear amongst the nation, but there are ways in which you can help yourself and get help from others during these times.
At Compare UK Quotes, we advise that you start preparing your finances and putting plans in place now to prepare for the impending recession, so that you can feel more comfortable moving forward and avoid getting into further financial difficulty later down the line.
For further advice and information regarding your finances during these unprecedented times, see our related articles below.