London: Britain’s economy shrank by a record 20.4 per cent in April from March as the country spent the month in a tight coronavirus lockdown, official data showed in what is likely to be the bottom of the crash before a long and slow recovery.
In a slump that dwarfed previous downturns in Britain’s recent history, the Office for National Statistics also said the economy shrank by 24.5 per cent compared with April last year.
“Record GDP falls in today’s figures – when taking April and March together the economy is 25 per cent smaller,” ONS statistician Rob Kent-Smith said on Twitter. “The economy in April [is] the same size as it was in 2002.”
The Bank of England and the country’s budget office have warned that Britain could be heading for its deepest recession in three centuries this year. “In line with many other economies around the world, coronavirus is having a severe impact on our economy,” finance minister Rishi Sunak said.
Woes all over Europe
France’s economy looks set to show a 15 per cent quarterly contraction in April-June period, the Bank of France estimated on Thursday. German industrial output dropped by 17.9 per cent in April from March, data showed this week.
However, the Organisation for Economic Co-operation and Development said on Wednesday that Britain was on course for the worst downturn among the countries it covers with the economy forecast to contract 11.5 per cent this year.
Sunak said government measures including a scheme to pay workers who are only temporarily laid off, alongside grants, loans and tax cuts for companies, meant Britain had “the best chance of recovering quickly as the economy reopens”.
Next week much of Britain’s retail sector is due to reopen as long as shops follow social distancing rules.
Output in the dominant services sector fell by 19.0 per cent in April from March while manufacturing was down more than 24 per cent and construction crashed by nearly half.
A dive off a cliff’s edge
In the three months to April, the overall economy contracted by 10.4 per cent from the previous three-month period, also the biggest fall on record since the ONS began to publish monthly economic data in 1997.
“Given the lockdown started to be eased in May, April will mark the trough in GDP. So we are past the worst,” Andrew Wishart, an economist with Capital Economics, said.
“While the trough in activity is now behind us, the fiscal cost of the collapse and the rise in the unemployment rate to over 8 per cent that will result are only just starting to emerge.”
BoE Governor Andrew Bailey said on Wednesday he could see some signs of an economic recovery as the coronavirus lockdown restrictions were lifted, but he warned there was still likely to be long-term economic damage.
The BoE is expected to announce a further increase of at least 100 billion pounds in its bond-buying firepower next week to try to stop the coronavirus crisis from inflicting further damage on Britain’s economy.