In March, the UK economy fell 5.8%, setting an absolute record. The coronavirus pandemic provoked the shutdown of a large number of small and medium-sized enterprises, and the government had to take measures to slow the spread of the disease.
According to the United Kingdom’s Office of National Statistics, the economic decline has been the most significant since monthly counting began in 1997. GDP for the first three months of the year fell by 2% compared with the previous quarter, which was the sharpest decline after the global financial crisis.
“March GDP figures indicate that the UK economy was in freefall for two weeks after the entry into force of the self-isolation regime”, – Ruth Gregory, senior British economist at Capital Economics, said.
The pessimistic economic data for March coincide with the weakening of the quarantine regime in England. Prime Minister Boris Johnson has called on workers in some industries, such as construction and manufacturing, to return to their jobs starting Wednesday. The hotel and non-essential retail business will remain closed.
Last week, the Bank of England warned that the British economy could contract by 14% this year. This would be the largest annual decline since the decline of 15% in 1706, based on the best estimate of the historical data bank.
In a report that examined the impact of the pandemic, the central bank said GDP could fall by as much as 25% in the second quarter, with the result that the economy would be 30% smaller than at the end of 2019. Unemployment is expected to increase to 9%.
The Bank of England expects a quick economic recovery in 2021, but warned that its forecast, which implies a gradual easing of social distance measures and “very significant” monetary and fiscal stimulus, depends on “the development of the pandemic and how governments, households and enterprises respond”.