UK economy stagnates in early 2020

UK economy stagnates in early 2020

The UK economy stagnated in the three months to January, according to data published by the Office for National Statistics.

The ONS revealed this morning (March 11) this was the third successive three-month period when GDP growth was at 0.0 per cent, with the car sector proving the main drag.

It said: "The services sector showed no growth in the three months to January 2020. The main drivers behind the weakening seen in services were the wholesale, retail and motor trade sector and the information and communication sector, which fell by 0.7 per cent and 1 per cent, respectively."

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Meanwhile the manufacturing sector has continued to show weaknesses, with this sector shrinking by 3.2 per cent over the quarter - its eight-successive three-month period of falling growth.

Howard Archer, the chief economic adviser to the EY Item Club, said the growth figures were "very disappointing" and they suggested the UK economy was weak before coronavirus became a factor, despite hopes that December's general election would trigger an uplift.

The news comes after the Bank of England decided to cut interest rates by 0.5 percentage points to 0.25 per cent to combat the economic effects of the spread of coronavirus.

Samuel Tombs, the chief UK economist of Pantheon Economics, said: "[The monetary policy committee] probably would have cut Bank rate this month anyway, had the virus never spread to Britain."