GDP: 2020 worst year on record for UK economy despite ending with stronger bounceback
The UK economy bounced back more strongly than first thought in the second half of last year despite enduring its worst year on record.
After a turbulent time over the first lockdown, the economy grew by 16.9% and 1.3% in the third and fourth quarters respectively, the Office for National Statistics (ONS) said.
This marked steep increases on the 16.1% and 1% previous estimates.
But the ONS said gross domestic product (GDP) – a measure of a country’s wealth – shrank by more than expected in the second quarter during the first coronavirus lockdown, plunging by 19.5%.
This left GDP plummeting by 9.8% overall in 2020, against the 9.9% first pencilled in, which still makes it the worst annual performance for more than 300 years.
Jonathan Athow, deputy national statistician at the ONS, said: “Our revised quarterly figures show the economy shrank a little more than previously estimated in the initial stages of the pandemic, before recovering slightly more strongly in the second half of last year.
“However, these new estimates paint the same overall picture as before, with historically large falls in GDP in the spring, followed by a recovery in the summer and autumn.”
Due to the upward revision to figures for the final three months of 2020, the level of GDP was 7.3% below that of a year earlier, against a previous estimate of 7.8%, according to the ONS. The 9.8% annual drop marks the steepest since official records began, while historical figures from the Bank of England suggest it is the biggest contraction since the Great Frost of 1709. But the ONS stressed that its GDP estimates are “subject to more uncertainty than usual” and likely to have larger-than-normal revisions due to the challenges of collecting data in the pandemic. The UK economy suffered among the largest contractions of all the countries in the Organisation for Economic Co-operation and Development (OECD), with only Spain and Argentina seeing steeper falls. Recent monthly figures from the ONS also show that the third English lockdown sent GDP plunging 2.9% in January, though this was better than feared by experts. In separate figures also released on Wednesday, the ONS said the UK current account deficit – the difference between the value of the goods and services the UK imports and the goods and services it exports – widened to £26.3 billion in the fourth quarter of 2020. This is equivalent to 4.8% of Britain’s GDP and is almost twice the level seen in the previous three months as firms stockpiled imports ahead of the December 31 Brexit deadline.