LONDON (UK) – Britain’s economy faced it’s biggest crash in output in more than 300 years in 2020 when it slumped by 9.9% after the pandemic hit. However, the economy looks on course for a recovery this year.
Last year’s fall in output was the biggest since modern official records began after World War Two. Longer-running historical data hosted by the Bank of England suggest it was the biggest drop since 1709, when Britain suffered a “Great Frost”.
The GDP fall is steeper than almost any other big economy’s, though Spain – also hard-hit by the virus – suffered an 11% decline.
Some of the damage reflects how Britain’s economy relies more on face-to-face consumer services than other countries, as well as disruption to schooling and routine healthcare, which few other countries factored in to GDP.
“As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth Management.
Britain’s economy grew 1.2% in December alone, after a 2.3% fall in output in November when there was a partial lockdown, pointing to greater resilience to COVID restrictions than at the start of the pandemic.
That left output 6.3% lower than in February before the start of the pandemic, the Office for National Statistics said.
However, the Bank of England forecasts the economy will shrink by 4% in the first three months of 2021 because of the new lockdown and Brexit disruption.
It thinks it will take until early 2022 before GDP regains its pre-COVID size, assuming vaccination continues at the current rapid pace, which outstrips the rest of Europe’s. Many economists think recovery will take longer.
“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” finance minister Rishi Sunak said.
Sunak, facing the heaviest borrowing since World War Two, said he would continue to focus on protecting jobs when he sets out a new annual budget on March 3.