"The UK economy has seen the worst fall ever recorded, surpassing historic events such as the credit crisis, as the true toll of the pandemic is revealed."
In Q4, GDP is estimated to have grown by 1.0%, following revised 16.1% growth in Q3. Despite two consecutive quarters of growth, the level of GDP in the UK is 7.8% below its Q4 2019 level.
Kemar Whyte, senior economist at NIESR, commented: “According to today’s ONS figures, UK GDP contracted by 9.9 per cent in 2020, which is likely to be the largest annual fall among G7 countries last year. Economic growth slowed significantly, dropping from 16.1 per cent in the third quarter to 1 per cent in the last quarter of the year. As a result, the level of GDP in the UK remained about 8 per cent below pre-pandemic levels even before a third lockdown became necessary in January 2021. With Covid-19 restrictions expected to remain elevated until early spring, we anticipate a sharp decline in activity during the first quarter of the year. Nevertheless, growth will pick up from the second quarter onwards as restrictions ease on the back of a successful vaccination programme.”
Derrick Dunne, CEO at Beaufort Investment, added: “The UK economy has seen the worst fall ever recorded, surpassing historic events such as the credit crisis, as the true toll of the pandemic is revealed.
“The falls last year were extreme, with some industries unable to operate for months on end, and while December showed a return to growth, the truth is there is more of this to come.
“With the economy likely to be in lockdown for much of Q1, a crunch on peoples' incomes is coming, especially if support measures are withdrawn too soon.
“For savers and investors concerned by the outlook, now is the time to hold one’s nerve. Avoid resorting to rash decisions that could damage your outcomes when the numbers do bounce back. Nonetheless, now is a good time to review your financial situation and make sure your plans align to your longer-term goals.”
