UK economy stagnated in fourth quarter amid turmoil over Brexit

Hopes that political stability might lead to recovery dashed by Covid-19 crisis

Britain’s economy on course to shrink by 10 per cent in the first half of the year. Photograph: Chris J Ratcliffe/Bloomberg

Britain’s economy on course to shrink by 10 per cent in the first half of the year. Photograph: Chris J Ratcliffe/Bloomberg

 

The UK economy stagnated in the fourth quarter, a roller-coaster period that began with turmoil over Brexit and ended with relief after prime minister Boris Johnson’s landslide election win.

However, hopes that the return of political stability might lay the foundations for a steady recovery have been blown away by the economic fallout from the coronavirus pandemic.

Britain is now facing its steepest slump for a century, with the economy on course to shrink by 10 per cent in the first half of the year, according to Bloomberg Economics.

The UK’s Office for National Statistics figures on Tuesday show gross domestic product was unchanged from the third quarter, unrevised from a previous estimate. The annual growth rate was also unrevised at 1.1 per cent.

The current account deficit, meanwhile, narrowed sharply to £5.6 billion (€6.3 billion) amid a surge in exports, though recent figures have been heavily distorted by flows of non-monetary gold. The gap was the equivalent of 1 per cent of GDP, the smallest since 2011. – Bloomberg