Business & Economy

UK’s GDP plummets 20.4 percent in April

London, Jun 12 (efe-epa).- The United Kingdom’s economy shrank by 20.4 percent in April this year due to a cessation of business activity and temporary layoffs enforced to contain the spread of Covid-19.

It was the biggest monthly contraction of GDP since records began in 1997 and was three times greater than the maximum monthly fall registered during the 2008/9 financial crisis, which was 6.9 percent in March 2009, according to the Office of National Statistics.

The ONS added that the drop experienced in April was the equivalent to £30 billion in gross added value.

Britain’s GDP had contracted 5.8 percent in March this year, the latter half of which was affected by nationwide lockdown ordered by the government.

Jonathan Athow, deputy national statistician at the ONS, tweeted: “As was expected, we saw a huge fall in economic activity in April, down 20 percent compared to March.

“Taking March and April together, the fall was 25 percent: in two months the economy shrank by a quarter.

“At risk of stating the obvious, the size and suddenness of the fall in economic activity is completely unprecedented,” he added.

He said there were no areas of the British economy that had not been affected by the coronavirus restrictions, a period in which businesses across the board reported zero returns.

The lockdown heralded a paralysis in production output, services and construction, the ONS reported.

Air travel fell by 90 percent under the lockdown, construction fell by 40 percent while services, which account for almost 80 percent of the UK economy, fell by 19 percent, according to the report.

“Exactly how quick economic activity will grow will depend on how quickly the restrictions are lifted, the course of the pandemic, wider economic policies and underlying factors such as consumer confidence and international trade,” Athow said.

May is forecast to throw up similar trends to April, before a slight uptick in June’s economic outlook as businesses begin to reopen in the UK.

A 20.3 percent drop in production means April also saw the largest fall in UK production since records began in 1968. Other record periods of monthly contraction in British history include the 8 and 7.3 percent drop in output during the Miners Strikes of 1972 and ‘74 respectively.

The UK economy came to a standstill on 23 March when Prime Minister Boris Johnson ordered a lockdown across the country, meaning bars, restaurants and services industries had to close and people were asked to stay at home as much as possible.

To stave off the economic damage resulting from such a drastic decision, the UK government launched a huge furlough scheme designed to cover up to 80 percent of laid-off worker salaries.

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