The UK economy shrank by a record of 5.8% in March from February. This comes
as no surprise since the government ordered a country-wide in the wake of the
raging Coronavirus epidemic, reports indicate.
In the first quarter of 2020, the GDP shrunk by 2% from the last quarter of 2019, the Office for National Statistics has stated.
That was the largest fall measured from one quarter to another since the end of 2008, amid the financial crisis. However, the fall was slightly lighter than the average 2.5% Reuters poll of economists had forecast.
It was also a smaller fall than a 3.8% slump in GDP in the euro zone in the three months from January to March, although several countries in the single currency area began their lockdowns before Britain.
The fall was also smaller than the GDP in the Euro zone which fell by 3.8%. However, it is worth noting that many of the countries in the Euro zone were forced into lockdown before the UK.
The numbers in April will likely show a bigger fall in the UK economic output compared to March because British companies and consumers spent the entire month in a government-enforced quarantine.
The Bank of England stated the UK economy could be heading for the sharpest annual drop in GDP in over 300 years, with predictions being as grim as 14%, followed by an estimated 15% rise in 2021, RTE reports.
“The speed and scale at which coronavirus has hit the UK economy is unprecedented and means that the Q1 decline is likely to be followed by a further, more historically significant, contraction in economic activity in Q2,” stated Suren Thiru, head of economics at the British Chambers of Commerce.
“Given that the economy was growing a quarterly rate of about 0.1% before the lockdown, today’s release therefore implies that economic activity after the lockdown was imposed on March 23 was down a whopping 21%,” stated Ruth Gregory, an economist with Capital Economics.