Skip to content

Figures Show the British Economy Was Slowing Before Second Lockdown

The latest numbers released by the Office for National Statistics (ONS) reveal that the UK’s economy was already showing signs of going backwards before England’s second lockdown. This has increased fears that the economy is set to fall further.

The ONS Report

In the month of October, the country’s GDP grew by just 0.4%, as it continued to slowly recover from the first lockdown earlier in the year. However, it is still 7.9% smaller than it was before the pandemic wreaked havoc.

The good news is that the UK economy has now been growing steadily for six months in a row. This has led to it recovering 23.4% of what was lost during the tough lockdown in the spring of this year, leading to the sharpest recession in over 3 centuries.

The GDP fell by 19.5% in April alone, which was a record drop. In the first two quarters of 2020 combined, the drop in the GDP was 25.3%. With many firms struggling there has been a rise in the amount of collection agency fees paid, as they look for new ways to get through this crisis.

In October, it was manufacturing that led the way, followed by the health sector. Food services suffered a slowdown due to the introduction of tiered restrictions across England. It is thought that the final quarter of 2020 will see the national economy decline due to the impact of the latest restrictions.

Yet, it is clear that the recovery was already slowing down before the latest round of severe restrictions were put in place. It is now feared that the next set of figures will show a contraction in the GDP. Virtually every sector has slowed down since July as the recovery began to falter.

A Look Ahead

The Office for Budget Responsibility (OBR) watchdog believe that the economy will be 11% smaller when we look at 2020 overall. It could take the UK a couple of years to make up for ground lost due to the pandemic and subsequent restrictions.

In terms of unemployment numbers, they are expected to reach a maximum of two and a half million when the furlough period comes to an end in the second quarter of 2021. This would mean that over 7% of the nation’s workforce would be out of work.

More numbers come from the Confederation of British Industry (CBI). They also believe that we will see a record-breaking plunge in the British economy this year, with 11.1% lost. The CBI predict that the GDP will grow by 6% in 2021 and then by 5.2% in the following year.

All of these numbers add up to the deepest British recession since the Great Frost of 1709, putting in the shade even the impact of massive events like the World Wars and the Spanish Flu outbreak.

Tony Danker is the new director-general of the CBI. He pointed out that we need to “find new ways to get businesses investing” in the new year to stimulate the economy.