UK economy contracted by 20.4% in April, the largest monthly fall on record

Elliot Smith Friday | 06/12/2020 13:30

A pedestrian walks past closed-down shops on an empty Regent Street in London on April 2, 2020. Photo: Tolga Akmen

The U.K. posted the biggest monthly fall in GDP (gross domestic product) in the country’s history in April, according to the Office for National Statistics.

GDP fell by 20.4% compared to the previous month, a sharper contraction than the 18.4% expected by analysts polled by Reuters. This represented a 24.5% decline from April 2019, as lockdowns necessitated by the coronavirus pandemic hammered economic activity.

In the three months up to the end of April, the economy contracted by 10.4% compared to the previous three-month period, the ONS also confirmed, again falling below analyst expectations of a 10% decline.

Britain entered lockdown on March 23 in a bid to curtail the spread of the coronavirus pandemic, but has confirmed 292,860 infections as of Friday morning, according to Johns Hopkins University data. Some measures began to be eased in May, but the vast majority of the U.K. economy was stymied throughout April.

“Q1 GDP figures highlighted the damage caused by just the first few weeks of lockdown — the Q2 estimates expected later this month will show output in a crater,” said Ed Monk, associate director for Personal Investing at Fidelity International.

“However, with social distancing measures starting to relax, businesses slowly returning to work, and moves to reopen non-essential shops from Monday, the economy is gradually reopening and the growth number will hopefully spring back in the months ahead. The question is by how much, and the ability of companies to stay afloat and retain staff is now key.”

Sterling was fairly steady after the data release, trading at $1.2575 on Friday morning London time.

Source: CNBC