GDP falls by record 5.8% in March: ONS

GDP fell by 5.8% in March, the biggest monthly decline ever recorded by the ONS, as the impact of the Covid-19 outbreak hit the UK economy.

Related topics:  Finance News
Rozi Jones
13th May 2020
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"With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall."

GDP fell by 2.0% over Q1, the lowest rate since Q4 2008 during the financial crisis.

When compared with the same quarter a year ago, UK GDP decreased by 1.6%, the biggest fall since Q4 2009, when it also fell by 1.6%.

As Covid-19 caused widespread disruption to economic activity, services output fell by a record 1.9% in Q1 and there were also significant contractions in production and construction.

Household consumption fell by 1.7% over the quarter, the largest contraction since Q4 2008, alongside declines in gross fixed capital formation, government consumption and trade volumes.

The ONS pointed that its estimates for Q1 are more uncertain than usual due to the challenges faced in collecting the data under the governments imposed public health restrictions.

In its results, the ONS said: "Given the uncertainties in estimating the labour market and government intervention to support business, the breakdown of the income approach to GDP should be treated with particular caution."

Jonathan Athow, deputy national statistician for economic statistics at the ONS, commented: “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.

“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially.

“Although very few industries saw growth, there were some that did including IT support and the manufacture of pharmaceuticals, soaps and cleaning products.

“The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China.”

Fran Boait, executive director of Positive Money, added: “As GDP continues to fall policymakers will be increasingly tempted to accelerate the easing of emergency public health measures in order to get the economy growing again. There is a clear tension between this dash for growth and public health, as illustrated by the government’s eagerness to get workers back to workplaces regardless of whether it is safe.

“The evidence shows that the vast majority of the public think we should worry more about people’s health and wellbeing than GDP growth during this crisis. The government should not pay too much attention to today’s statistics and instead put public health ahead of private wealth.”

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