The chancellor says his priority remains protecting jobs as official figures showed the coronavirus crisis had dealt the worst blow to the economy since the Great Frost of 1709.
The Office for National Statistics (ONS) said early estimates, subject to revision, suggested that gross domestic product (GDP) tumbled by 9.9% in 2020.
It was a consequence of large parts of the economy being placed in hibernation through unprecedented lockdowns and other restrictions on normal activity as efforts to contain COVID-19 took their toll on output.
The figures showed a fightback from the record quarterly slump between April and June, the second quarter, when GDP nosedived by 20% as a consequence of the initial lockdown.
They also confirmed the prospect of a so-called double-dip recession was averted at the end of the year amid renewed lockdown conditions, with a first estimate for the October-December quarter showing growth of 1% – a better than expected performance.
ONS deputy national statistician for economic statistics, Jonathan Athow, said: “Loosening of restrictions in many parts of the UK saw elements of the economy recover some lost ground in December, with hospitality, car sales and hairdressers all seeing growth.
“An increase in COVID-19 testing and tracing also boosted output.
“The economy continued to grow in the fourth quarter as a whole, despite the additional restrictions in November.
“However, GDP for the year fell by nearly 10%, more than twice as much as the previous largest annual fall on record.”
According to Bank of England historical data, it marked the worst performance for the economy since the Great Frost hibernation of 1709 – more than 300 years ago – when a horrifically cold European winter, followed by widespread floods, crippled activity.
The consequences of the public health emergency reach far beyond lost output as previous ONS figures, yet to fully reflect 2020 as a whole, show more than 1.7 million out of work with over 800,000 fewer people on company payrolls since the pandemic began.
Measures to tackle the crisis and protect as many jobs and businesses as possible mean the Treasury has embarked on its largest peacetime borrowing programme, that is tipped to exceed £400bn, in the current financial year.
Chancellor Rishi Sunak confirmed he would use his budget on 3 March to announce further aid given the continued pressure on activity – with the firm focus on protecting jobs.
He suggested he would ignore pressure to ease the strain on the public purse strings through widespread tax increases but signalled the budget would have to include some sacrifices.
“Public finances are important and we’ve only been able to provide the support that we have because of a strong economy and finances coming into this,” he told media.
“I want to make sure that whenever the next shock hits the country that we can also respond in the same way that will require our public finances to be put back in a strong position.”
Mr Sunak also dismissed the notion that the UK economy had seen the largest contraction among its international competitors, arguing that different measures of GDP calculation suggested the UK had performed better than, and at least in line with, many G20 nations.
https://www.bmmagazine.co.ukTagged with: BUSINESS NEWS • ECONOMIC NEWS • MAKE MONEY