Jumat, 15 Januari 2021

UK economy shrank by 2.6% in November - BBC News

People walk past a store with the words 'Closing down sale 20% off everything' painted on the window
PA Media

The UK economy shrank by 2.6% in November as fresh lockdown restrictions in England reduced economic activity, official figures show.

The Office for National Statistics said it meant gross domestic product was 8.5% below its pre-pandemic peak.

November's decline came after six consecutive months of growth, with a 0.6% improvement in October.

The services sector was hit hard, although some manufacturing and construction activity improved.

The closure of businesses such as pubs, hairdressers and many shops meant the sector contracted by 3.4%. The services sector is now 9.9% below the level of February 2020, the ONS said.

Chancellor Rishi Sunak said the figures showed "it's clear things will get harder before they get better and today's figures highlight the scale of the challenge we face".

However, he said the vaccine roll-out and economic support measures meant there were reasons to be hopeful. "With this support, and the resilience and enterprise of the British people, we will get through this," he said.

GDP in 2020

ONS director for economic statistics Darren Morgan said: "The economy took a hit from restrictions put in place to contain the pandemic during November, with pubs and hairdressers seeing the biggest impact.

"However, many businesses adjusted to the new working conditions during the pandemic, such as widespread use of click and collect as well as the move online.

He added: "Manufacturing and construction generally continued to operate, while schools also stayed open, meaning the impact on the economy was significantly smaller in November than during the first lockdown.

"Car manufacturing, bolstered by demand from abroad, housebuilding and infrastructure grew and are now all above their pre-pandemic levels."

Economist Rory Macqueen, from the National Institute of Economic and Social Research, said the figures confirm a significant slowdown in the last quarter of 2020, "despite November's lockdown in England clearly having a far smaller effect than the first".

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Analysis box by Faisal Islam, economics editor

The fall in the economy in November was still considerable, but the figures show businesses adapting to difficult conditions. The hit was a fraction of what occurred in the first lockdown last April, and was mainly confined to the service sector, with pubs and hairdressing for example in sharp decline.

Manufacturing and construction largely remained open, as did previously shut public services such as schools. By November car manufacturing and house building were back above the level of output before the pandemic.

The trade figures also showed a £7bn increase in EU imports in the three months to November as traders stockpiled car parts, medicines and other goods ahead of the end of the Brexit transition period.

The renewed regional tiered restrictions in December, and more severe national lockdowns this month, still indicate a possible return to overall recession in this tough winter.

Business groups continue to argue that extra support is required to support jobs and cash flow well before the Budget in March. But a more sustained lifting of restrictions as vaccines are rolled out should see growth return after the spring.

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2021-01-15 08:23:00Z
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