Economy  

Economy shrinks 5.8% in March

Economy shrinks 5.8% in March

The UK economy shrank at the fastest rate since records began in March, with gross domestic product falling 5.8 per cent.

Figures from the Office for National Statistics, published today (May 13), signalled the first direct impacts of the coronavirus on the economy, with GDP falling 2 per cent in Q1 this year.

This meant that over the first three months of the year the UK economy shrank at the fastest pace since the financial crash.

By comparison, during the global financial crisis from the peak in February 2008 to the lowest point in March 2009 — a total of 13 months — GDP fell 6.9 per cent.

As the UK was placed in lockdown on March 23, the figures represent just one week of the impact of the official lockdown and the ONS therefore predicted the economy would suffer a more substantial decline during Q2 of this year.

The ONS stated: "This is the largest quarterly contraction in the UK economy since the 2008 global financial crisis and reflects the imposing of public health restrictions and voluntary social distancing put in place in response to the coronavirus pandemic."

Nearly all industries contributed to the drop, with accommodation and food services suffering the most with a 9.5 per cent contraction over the three months to March.

On a quarterly basis, education fell by 4 per cent as a result of school closures at the end of March, while travel agents fell by 14.6 per cent when hotels and campsites shut.

Despite widespread falls, some industries saw growth. The computer programming, consultancy and related activities sectors grew by 1.4 per cent in Q1 while the manufacture of pharmaceuticals, soaps and cleaning products also grew.

Jonathan Athow, deputy national statistician for economic statistics, said: “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.”

Mr Athow added the pandemic had also hit trade globally, including a notable drop in imports from China.

imogen.tew@ft.com

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