GDP falls 20.4% in April as lockdown hits hard

12 June 2020

The record fall underlines the damage the coronavirus pandemic has had on the economy

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The UK economy suffered its worst-ever monthly collapse in April, with GDP shrinking by 20.4%, according to the Office for National Statistics (ONS).

The figures highlight the growing impact coronavirus lockdown measures are having on economic activity.

Britain entered lockdown on 23 March in a bid to reduce the impact of the pandemic.

The restrictions meant many workplaces, business, restaurants and shops all closed, leading to a fall in consumer demand.

The ONS figures show virtually all areas of the economy witnessed a decline.

The construction industry saw the biggest hit, with output plummeting by 40.1% during April - the largest fall since monthly records began in January 2010. Manufacturing had a decline of 24.3%.

The services industry – which makes up 80% of the UK economy – fell by 19%, the largest monthly fall on record.

With flights grounded, the airline industry shrank by 92.8% in the biggest fall of any sector, while travel and tour operators fell by 89.2%.

The food and drink industry was next, with a fall of 89.2%.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, says: “Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.

“Manufacturing and construction also saw significant falls, with manufacture of cars and housebuilding particularly badly affected.”

The ONS says that in the three months to April GDP fell by 10.4% compared to the previous quarter.

What does the Government say?

The Government has slowly begun easing lockdown restrictions, with non-essential shops due to open from 15 June. Pubs and hairdressers are expected to open in July.

Chancellor Rishi Sunak says: "In line with many other economies around the world, coronavirus is having a severe impact on our economy.

"We have set out our plan to gradually and safely reopen the economy. Next week, more shops on the high street will be able to open again as we start to get our lives a little bit more back to normal."

Will things improve?

Commentators expect the economy to pick up once social distancing measures are eased, although a full recovery could be years away.

Adrian Lowcock, head of personal investing at Willis Owen, says: “The good news is that April is expected to be the low point, so subsequent readings should improve, but the repercussions of this will be felt for some time.

“For investors, being nimble and keeping defensive assets not only helps protect your investments from falls in markets but also means you can take advantage when they happen, and in the current climate this makes more sense than ever.”

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