LONDON – Britain’s economy shrank by a record 5.8 per cent in March from February as the coronavirus crisis escalated and the government ordered a shutdown of much of the country to stop the spread of the virus, official data showed on Wednesday (May 13).
In the first three months of the year, gross domestic product contracted by 2.0 per cent from the last three months of 2019, the Office for National Statistics said.
That was the largest quarter-on-quarter fall since the end of 2008, during the depths of the financial crisis, though slightly smaller than the average 2.5 per cent forecast in a Reuters poll of economists.
It was also a smaller fall than a 3.8 per cent slump in GDP in the euro zone in the January-March period although several countries in the single currency area began their lockdowns before Britain.
Figures for April are likely to show a bigger fall in British economic output than in March because the entire month was spent under lockdown by British companies and consumers.
“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,” Suren Thiru, head of economics at the British Chambers of Commerce, said.
Last week, the Bank of England said Britain’s economy could be heading for its sharpest annual slump in GDP in more than 300 years, saying a 14 per cent fall was possible, followed potentially by a 15 per cent rise in 2021.
“Given that the economy was growing a quarterly rate of about 0.1 per cent before the lockdown, today’s release therefore implies that economic activity after the lockdown was imposed on March 23 was down a whopping 21 per cent,” Ruth Gregory, an economist with Capital Economics, said.
The ONS said output in Britain’s giant services sector fell by a record 1.9 per cent in the first quarter and there were also significant contractions in production and construction.