'Challenging' times ahead after worst year for economy since 1700s
- Credit: DENISE BRADLEY
An East Anglian business leader has warned of a "challenging" year ahead, after stats show the UK economy had its worse year for 300 years in 2020.
Official figures show the economy had a steeper contraction during the first coronavirus lockdown but bounced back more strongly than previously thought at the end of the year.
The Office for National Statistics (ONS) said gross domestic product (GDP) – a measure of the size of the economy – shrank by even more than first forecast between April and June last year – plummeting by 19.5% against the 19% initial estimate.
However, in a raft of revisions to previous figures, the ONS said the economy rebounded by 16.9% and 1.3% in the third and fourth quarters of 2020 respectively.
This marked steep increases on the 16.1% and 1% previous estimates.
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The widespread revisions left GDP plummeting by 9.8% overall in 2020, against the 9.9% first pencilled in.
Chris Starkie, chief executive of New Anglia Local Enterprise Partnership, said: “This overall picture is not surprising, though the figures also show a stronger-than-expected bounce back in autumn 2020.
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“This year will certainly be challenging – not only as our economy begins its recovery from the impact of the pandemic, but also as we adjust to the post-Brexit landscape and moving towards Net Zero at pace.
“The fast rollout of vaccines has bolstered confidence for many but we’re aware that the coming months will still be very challenging for lots of our local businesses.
"The roadmap for lifting restrictions has also provided a level of confidence and we know that many businesses which have been closed are now preparing to reopen in a Covid-secure way, so we hope that will stay on track.”
Jonathan Athow, deputy national statistician at the ONS, said: “Our revised quarterly figures show the economy shrank a little more than previously estimated in the initial stages of the pandemic, before recovering slightly more strongly in the second half of last year.
“However, these new estimates paint the same overall picture as before, with historically large falls in GDP in the spring, followed by a recovery in the summer and autumn.”
Due to the upward revision to figures for the final three months of 2020, the level of GDP was 7.3% below that of a year earlier, against a previous estimate of 7.8%, according to the ONS.
The 9.8% annual drop marks the steepest since official records began, while historical figures from the Bank of England suggest it is the biggest contraction since the Great Frost of 1709.
But the ONS stressed that its GDP estimates are “subject to more uncertainty than usual” and likely to have larger-than-normal revisions due to the challenges of collecting data in the pandemic.
The UK economy suffered among the largest contractions of all the countries in the Organisation for Economic Co-operation and Development (OECD), with only Spain and Argentina seeing steeper falls.