UK economy shrank in November as new lockdown hit
However, the scale of the decline was much smaller than most analysts expected
UK prime minister Boris Johnson gestures as he holds a remote press conference.
Britain’s economy shrank by 2.6 per cent in November, the first monthly fall in output since the country was under its initial Covid lockdown last April as new restrictions were imposed to slow the spread of the disease.
However, the scale of the decline was much smaller than most analysts expected – a Reuters poll had pointed to a 5.7 per cent contraction.
Britain’s economy is now 8.5 per cent smaller than it was before the start of the coronavirus pandemic in February.
“Many businesses adjusted to the new working conditions during the pandemic ... while schools also stayed open, meaning the impact on the economy was significantly smaller in November than during the first lockdown,” ONS statistician Darren Morgan said.
The Bank of England had estimated Britain’s economy would shrink by just over 1 per cent over the final three months of 2020.
With a new lockdown in place since January the country is still at risk of falling into a double-dip recession.
The BoE ramped up its bond-buying programme to almost £900 billion (€1bn) in November and governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed.
Friday’s data showed Britain’s economy in November was 8.9 per cent smaller than a year earlier, a smaller drop than the 12.1 per cent fall forecast in a Reuters poll. In October the economy had been 6.8 per cent smaller than a year before.
At its lowest point in April, when many businesses closed temporarily, output was a record 25 per cent below its year-ago level.
November’s downturn was led by the services sector, where output fell 3.4 per cent from October as pubs, restaurants, non-essential shops and many other consumer services businesses had to shut as part of a four-week lockdown in England and similar measures in other parts of the United Kingdom. – Reuters